Exhibit 10.56
LEASE AGREEMENT
BETWEEN
CAPITAL AUTOMOTIVE L.P., LANDLORD
AND
PLAINS CHEVROLET, INC., TENANT
DATED: FEBRUARY 25, 1998
ARTICLE I LEASE AGREEMENT, LEASED PROPERTY AND TERM . . . . . . . . 1
1.01 Lease Agreement . . . . . . . . . . . . . . . . . . . . . 1
1.02 Contingent Upon Acquisition of the Leased Property. . . . 2
1.03 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04 Holding Over. . . . . . . . . . . . . . . . . . . . . . . 3
1.05 Surrender . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II RENT . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.01 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . 4
2.02 Payment . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.03 Security Deposit. . . . . . . . . . . . . . . . . . . . . 4
2.04 Base Annual Rent Adjustment . . . . . . . . . . . . . . . 5
2.05 Additional Rent . . . . . . . . . . . . . . . . . . . . . 5
2.06 Place(s) of Payment of Rent; Direct Payment of
Additional Rent . . . . . . . . . . . . . . . . . . . . . 5
2.07 Net Lease . . . . . . . . . . . . . . . . . . . . . . . . 5
2.08 No Termination, Abatement, Etc. . . . . . . . . . . . . . 5
ARTICLE IIII MPOSITIONS AND UTILITIES . . . . . . . . . . . . . . . 6
3.01 Payment of Impositions. . . . . . . . . . . . . . . . . . 6
3.02 Definition of Impositions . . . . . . . . . . . . . . . . 7
3.03 Utilities . . . . . . . . . . . . . . . . . . . . . . . . 8
3.04 Escrow of Impositions . . . . . . . . . . . . . . . . . . 8
3.05 Discontinuance of Utilities . . . . . . . . . . . . . . . 9
3.06 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . 9
4.01 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 9
4.02 Insurance Limits. . . . . . . . . . . . . . . . . . . . .11
4.03 Insurance Requirements. . . . . . . . . . . . . . . . . .11
4.04 Replacement Cost. . . . . . . . . . . . . . . . . . . . .12
4.05 Blanket Policy. . . . . . . . . . . . . . . . . . . . . .12
4.06 No Separate Insurance . . . . . . . . . . . . . . . . . .12
4.07 Waiver of Subrogation . . . . . . . . . . . . . . . . . .13
4.08 Mortgages . . . . . . . . . . . . . . . . . . . . . . . .13
4.09 Other Insurance Requirements. . . . . . . . . . . . . . .13
ii
ARTICLE V INDEMNITY; SUBSTANCES OF CONCERN. . . . . . . . . . . . .13
5.01 Tenant's Indemnification. . . . . . . . . . . . . . . . .13
5.02 Substances of Concern . . . . . . . . . . . . . . . . . .14
5.03 Audits. . . . . . . . . . . . . . . . . . . . . . . . . .16
5.04 Landlord's Option Re: Compliance. . . . . . . . . . . . .17
5.05 Environmental Indemnification . . . . . . . . . . . . . .17
5.06 Tenant's Cleanup Obligation . . . . . . . . . . . . . . .18
5.07 Existing Environmental Conditions . . . . . . . . . . . .18
5.08 Survival of Tenant's Obligations. . . . . . . . . . . . .18
ARTICLE VI USE AND ACCEPTANCE OF PREMISES . . . . . . . . . . . . .18
6.01 Use of Leased Properties . . . . . . . . . . . . . . . .18
6.02 Acceptance of Leased Properties . . . . . . . . . . . . .19
6.03 Conditions of Use and Occupancy . . . . . . . . . . . . .19
6.04 Financial Statements and Other Information. . . . . . . .19
ARTICLE VII REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS . .20
7.01 Maintenance . . . . . . . . . . . . . . . . . . . . . . .20
7.02 Compliance with Laws. . . . . . . . . . . . . . . . . . .20
7.03 Required Alterations. . . . . . . . . . . . . . . . . . .21
7.04 Mechanics' Liens. . . . . . . . . . . . . . . . . . . . .21
7.05 Replacements of Fixtures. . . . . . . . . . . . . . . . .21
7.06 Encroachments; Restrictions. 22
ARTICLE VIII ALTERATIONS AND SIGNS; TENANT'S PROPERTY;CAPITAL
ADDITIONS TO THE LEASED PROPERTIES . . . . . . . . . . . . . . . .22
8.01 Tenant's Right to Construct . . . . . . . . . . . . . . .22
8.02 Scope of Right. . . . . . . . . . . . . . . . . . . . . .23
8.03 Cooperation of Landlord . . . . . . . . . . . . . . . . .23
8.04 Commencement of Construction. . . . . . . . . . . . . . .24
8.05 Rights in Tenant Improvements . . . . . . . . . . . . . .24
8.06 Personal Property . . . . . . . . . . . . . . . . . . . .25
8.07 Requirements for the Tenant's Personal Property . . . . .25
8.08 Financings of Capital Additions to a Leased Property. . .26
ARTICLE IX DEFAULTS AND REMEDIES. . . . . . . . . . . . . . . . . .27
9.01 Events of Default . . . . . . . . . . . . . . . . . . . .27
9.02 Remedies. . . . . . . . . . . . . . . . . . . . . . . . .29
9.03 Right of Set-Off. . . . . . . . . . . . . . . . . . . . .32
9.04 Performance of Tenant's Covenants . . . . . . . . . . . .32
9.05 Late Charge . . . . . . . . . . . . . . . . . . . . . . .32
9.06 Litigation; Attorneys' Fees . . . . . . . . . . . . . . .32
9.07 Remedies Cumulative . . . . . . . . . . . . . . . . . . .33
iii
9.08 Escrows and Application of Payments . . . . . . . . . . .33
9.09 Power of Attorney . . . . . . . . . . . . . . . . . . . .33
ARTICLE X DAMAGE AND DESTRUCTION. . . . . . . . . . . . . . . . . .34
10.01 General . . . . . . . . . . . . . . . . . . . . . . . . .34
10.02 Landlord's Inspection . . . . . . . . . . . . . . . . . .35
10.03 Landlord's Costs. . . . . . . . . . . . . . . . . . . . .35
10.04 Rent Abatement. . . . . . . . . . . . . . . . . . . . . .35
10.05 Substantial Damage During Lease Term. . . . . . . . . . .35
10.06 Damage Near End of Term . . . . . . . . . . . . . . . . .36
10.07 Risk of Loss. . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE XI CONDEMNATION . . . . . . . . . . . . . . . . . . . . . .37
11.01 Total Taking. . . . . . . . . . . . . . . . . . . . . . .37
11.02 Partial Taking. . . . . . . . . . . . . . . . . . . . . .37
11.03 Restoration . . . . . . . . . . . . . . . . . . . . . . .37
11.04 Landlord's Inspection . . . . . . . . . . . . . . . . . .38
11.05 Award Distribution. . . . . . . . . . . . . . . . . . . .38
11.06 Temporary Taking. . . . . . . . . . . . . . . . . . . . .38
ARTICLE XII ADDITIONAL REPRESENTATIONS, WARRANTIES AND FINANCIAL
COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
12.01 Organization and Qualification. . . . . . . . . . . . . .39
12.02 Material Agreements. . . . . . . . . . . . . . . . . . .40
12.03 Changes in Condition. . . . . . . . . . . . . . . . . . .40
12.04 Franchises, Licenses, etc.. . . . . . . . . . . . . . . .40
12.05 Litigation. . . . . . . . . . . . . . . . . . . . . . . .41
12.06 Authorization and Enforceability. . . . . . . . . . . . .41
12.07 No Legal Obstacle to Lease. . . . . . . . . . . . . . . .41
12.08 Certain Business Representations. . . . . . . . . . . . .42
12.09 Certain Financial Covenants . . . . . . . . . . . . . . .43
12.10 Cash Flow Coverage Ratio Covenant . . . . . . . . . . . .43
12.11 Disclosure. . . . . . . . . . . . . . . . . . . . . . . .43
12.12 Covenant Not to Acquire . . . . . . . . . . . . . . . . .44
ARTICLE XIII ASSIGNMENT AND SUBLETTING; ATTORNMENT . . . . . . . .44
13.01 Prohibition Against Subletting and Assignment . . . . . .44
13.02 Changes of Control. . . . . . . . . . . . . . . . . . . .44
13.03 Operating/Service Agreements. . . . . . . . . . . . . . .45
13.04 Assignment. . . . . . . . . . . . . . . . . . . . . . . .46
13.05 REIT Limitations. . . . . . . . . . . . . . . . . . . . .46
13.06 Attornment. . . . . . . . . . . . . . . . . . . . . . . .47
13.07 Severance and Spin-Off. . . . . . . . . . . . . . . . . .47
iv
ARTICLE XIV ARBITRATION . . . . . . . . . . . . . . . . . . . . . .48
14.01 Controversies . . . . . . . . . . . . . . . . . . . . . .48
14.02 Appointment of Arbitrators. . . . . . . . . . . . . . . .48
14.03 Arbitration Procedure . . . . . . . . . . . . . . . . . .48
14.04 Expenses. . . . . . . . . . . . . . . . . . . . . . . . .48
14.05 Enforcement of the Arbitration Award. . . . . . . . . . .49
ARTICLE XV QUIET ENJOYMENT, SUBORDINATION,ATTORNMENT, ESTOPPEL
CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . .49
15.01 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . .49
15.02 Landlord Mortgages; Subordination . . . . . . . . . . . .49
15.03 Attornment. . . . . . . . . . . . . . . . . . . . . . . .49
15.04 Estoppel Certificates . . . . . . . . . . . . . . . . . .50
15.05 Waiver of Landlord's Lien . . . . . . . . . . . . . . . .50
ARTICLE XVI RIGHT OF FIRST OFFER. . . . . . . . . . . . . . . . . .51
16.01 Right of First Offer During Lease Term or Extension
Term. . . . . . . . . . . . . . . . . . . . . . . . . . .51
16.02 Right to Purchase at End of an Extension Term . . . . . .52
ARTICLE XVII MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . .53
17.01 Notices.. . . . . . . . . . . . . . . . . . . . . . . . .53
17.02 Advertisement of a Leased Property. . . . . . . . . . . .54
17.03 Landlord's Access . . . . . . . . . . . . . . . . . . . .54
17.04 Entire Agreement. . . . . . . . . . . . . . . . . . . . .54
17.05 Severability. . . . . . . . . . . . . . . . . . . . . . .55
17.06 Captions and Headings . . . . . . . . . . . . . . . . . .55
17.07 Governing Law . . . . . . . . . . . . . . . . . . . . . .55
17.08 Memorandum of Lease or Certain Rights Under the Lease . .55
17.09 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . .55
17.10 Assignment; Binding Effect. . . . . . . . . . . . . . . .55
17.11 Consents and Approvals. . . . . . . . . . . . . . . . . .55
17.12 Single Property . . . . . . . . . . . . . . . . . . . . .56
17.13 Modification. . . . . . . . . . . . . . . . . . . . . . .56
17.14 Incorporation by Reference. . . . . . . . . . . . . . . .56
17.15 No Merger . . . . . . . . . . . . . . . . . . . . . . . .56
17.16 Force Majeure . . . . . . . . . . . . . . . . . . . . . .56
17.17 Laches. . . . . . . . . . . . . . . . . . . . . . . . . .56
17.18 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . .56
17.19 Permitted Contests. . . . . . . . . . . . . . . . . . . .57
17.20 Construction of Lease . . . . . . . . . . . . . . . . . .57
17.21 Counterparts. . . . . . . . . . . . . . . . . . . . . . .58
17.22 Relationship of Landlord and Tenant . . . . . . . . . . .58
v
SCHEDULES
A Leased Properties and Initial Base Rent
B Permitted Exceptions
12.02 Material Agreements
12.03 Changes in Condition
EXHIBITS
2.02 Payment Account Information
2.04 Base Annual Rent Adjustment
5.07 Environmental Reports
15.02 Form of Subordination and Non-Disturbance Agreement
15.04 Form of Tenant Estoppel Certificate
vi
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") dated as of the 25th day of February,
1998, by and between CAPITAL AUTOMOTIVE L.P., a Delaware limited partnership
("Landlord"), having its principal office at 0000 Xxxxx Xxxx Xxxxxx, Xxxxx
000, Xxxxxxxxx, Xxxxxxxx 00000, and PLAINS CHEVROLET, INC., a Texas
corporation, having its principal office at c/o Cross-Continent Auto
Retailers, Inc., 0000 X. Xxxxxx, X.X. Xxx 000, Xxxxxxxx, Xxxxx 00000
("Tenant").
RECITALS
WHEREAS, Tenant or an Affiliate (as hereafter defined) has conveyed or
will convey to Landlord certain parcels of real estate and improvements
thereon upon which Tenant engages in motor vehicle retail and/or motor
vehicle related businesses (the "Business"), which parcels of real estate and
improvements thereon are described on SCHEDULE A attached hereto and
incorporated herein by reference (each hereinafter a "Leased Property" or
collectively, the "Leased Properties"), and Landlord and Tenant desire to
provide for the lease by Landlord to Tenant of the Leased Properties; and
WHEREAS, Landlord and Tenant desire that each of the Leased Properties
shall be the subject of this Lease and be used by Tenant in its operation of
the Business; and
WHEREAS, this Lease provides that additional real estate and
improvements thereon may be made subject to the operation and effect of this
Lease, upon execution by Landlord and Tenant of a Lease Supplement
designating each such additional property as a Leased Property hereunder.
NOW, THEREFORE, in consideration of the foregoing premises and of their
respective agreements and undertakings herein, and of other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant agree as follows:
ARTICLE I
LEASE AGREEMENT, LEASED PROPERTY AND TERM
1.01 LEASE AGREEMENT. Landlord does hereby let and lease unto Tenant,
and Tenant does here by take and hire from Landlord, the Leased Properties,
which shall respectively consist of:
(a) The parcels of land described and located at the addresses listed
in SCHEDULE A hereto, as more particularly described therein,
together with any additional parcels of real estate and
improvements thereon subsequently designated as a Leased Property
by the parties pursuant to a Lease Supplement as provided for
herein, together with all rights, titles, appurtenant interests,
covenants, licenses, privileges and benefits thereto belonging,
and any easements,
rights-of-way, rights of ingress or egress or other interests in,
on, or to any land, highway, street, road or avenue, open or
proposed, in, on, across, in front of, abutting or adjoining such
real property including, without limitation, any strips and gores
adjacent to or lying between such real estate and any adjacent
real estate (the "Land");
(b) All buildings, improvements, structures and Fixtures (as
hereinafter defined) now located or to be located or to be
constructed on the Land, including, without limitation, sidewalks,
landscaping, parking lots and structures, roads, drainage and all
above ground and underground utility structures and conduits
(on-site or off-site), equipment systems and other so-called
"infrastructure" improvements (the "Improvements");
(c) All equipment, machinery, fixtures, and other items of real and/or
personal property, including all components thereof, located in,
on or used in connection with, and permanently affixed to or
incorporated into, the Improvements, including, without
limitation, all furnaces, boilers, heaters, electrical equipment,
heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal,
air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, and similar
systems, all of which, to the greatest extent permitted by law,
are hereby deemed to constitute real estate, together with all
replacements, modifications, alterations and additions thereto
(collectively the "Fixtures"); and
(d) All easements, rights and appurtenances relating to the Land and
the Improvements.
SUBJECT, HOWEVER, to the liens, encumbrances, restrictions, agreements,
and other title matters listed or specifically referred to in SCHEDULE B
("Permitted Exceptions").
The Leased Properties shall however exclude all furniture, equipment,
inventory and items of moveable personal property attached to the Land or
Improvements that relate to the business being conducted on the Leased
Property which items may readily be removed without material damage to the
Land and Improvements whether or not such items might legally be considered
to be "fixtures" (all of which are owned by Tenant and shall hereinafter be
defined as the "Excluded Personal Property").
1.02 CONTINGENT UPON ACQUISITION OF THE LEASED PROPERTY. In the event
this Lease is executed prior to the conveyance by Tenant or an Affiliate of
the Leased Property to Landlord, the parties acknowledge that the
effectiveness of this Lease in respect of such Leased Property is contingent
upon the closing of such conveyance (the "Commencement Date").
2
1.03 TERM. The initial term of this Lease (the "Term") shall be for a
fixed term of One Hundred and Twenty (120) months commencing on the
Commencement Date. The initial term for any Leased Property designated in a
Lease Supplement shall begin onthe date of such Lease Supplement and expire
at the end of the Term or then current Extension Term (as hereafter defined),
as the case may be. Tenant shall have the right to extend this Lease for the
Leased Properties as a group, at Tenant's option, for one One Hundred and
Twenty (120) month renewal term from the expiration of the Term (the "First
Extension Term"), provided that no Event of Default (as defined in Section
9.01 hereof) shall exist and be continuing. In addition, Tenant shall have
the right to extend this Lease for the Leased Properties as a group at
Tenant's option, for a second One Hundred and Twenty (120) month renewal term
from the expiration of the First Extension Term (the "Second Extension Term",
each an "Extension Term", and collectively with the First Extension Term, the
"Extension Terms") provided that no Event of Default (as defined in Section
9.01 hereof) shall exist and be continuing. Tenant shall exercisethe First
Extension Term by written notice to Landlord no later than twelve (12)
months prior to the end of the Term. Tenant shall exercise the Second
Extension Term by written notice to Landlord no later than twelve (12) months
prior to the end of the First Extension Term. Notwithstanding anything else
to the contrary in this Agreement, the Rent during the Second Extension Term
shall be the Fair Market Rent (as hereafter defined) for the Leased
Property.Fair Market Rent shall be determined as soon as possible after
receipt by Landlord of Tenant's notice of option exercise, on the basis of
appraisals of independent appraisers selected in accordance with the
provisions of Section 16.02(b). Tenant shall have the right, in its sole
discretion, to rescind the exercise of Tenant's option to extend the Lease
for the Second Extension Term during a period of fifteen (15) business days
after the determination of the Fair Market Rent. If Tenant shall fail to
exercise the right to rescind within such fifteen (15) day period, the
election to extend shall be irrevocable and the Fair Market Rent so
determined shall be the Base Annual Rent during the Second Extension Term
notwithstanding any changes in the market rental rates, whether upward or
downward, which may occur after such determination. However, notwithstanding
anything else in this Agreement, Fair Market Rent shall become the Base
Annual Rent (as defined hereafter) and shall be subject to Base Annual Rent
Adjustments as set forth in Section 2.04.
1.04 HOLDING OVER. Should Tenant, without the express consent of
Landlord, continue to hold and occupy any Leased Property after the
expiration or earlier termination of the Term or any Extension Term, as the
case may be, such holding over beyond the Term and the acceptance or
collection of Rent (as defined hereinafter) by Landlord shall operate and be
construed as creating a tenancy from month-to-month and not for any other
term whatsoever. During any such holdover period Tenant shall pay to
Landlord for each month (or portion thereof) Tenant remains in such Leased
Property, in lieu of the Base Annual Rent (as defined hereafter) for such
Leased Property, an amount equal to the sum of one-twelfth (1/12) of (i) one
hundred seven percent (107%) of such Base Annual Rent (the "Holdover Rate"),
and (ii) as applicable, one hundred percent (100%) of the Additional Rent (as
defined hereinafter) for such Leased Property and Other Additional Rent (as
defined hereinafter) for such Leased Property, each as in effect on the
expiration date. Said month-to-month tenancy may be terminated by Landlord
by giving Tenant thirty (30) days written notice, and at any time thereafter
Landlord may re-enter and take possession of such Leased Property.
3
1.05 SURRENDER. Except as a result of (a) Tenant Improvements and
Capital Additions (as defined hereinafter); (b) normal and reasonable wear
and tear (subject to the obligation of Tenant to maintain each Leased
Property in good order and repair during the Term); and (c) casualty, taking
or other damage and destruction not required to be repaired by Tenant, Tenant
shall surrender and deliver up each Leased Property at the expiration or
termination of the Term or the Extension Term therefor, as the case may be,
broom clean, in good order and repair, free of the Excluded Personal Property
and any additional items of Tenant's personal property (together with the
Excluded Personal Property, the "Tenant's Personal Property"), all of which
Tenant shall remove prior to such surrender and delivery, and in as good
order and condition as of the Commencement Date.
ARTICLE II
RENT
2.01 BASE RENT. Tenant shall pay Landlord annual base rent (the "Base
Annual Rent") as to the Leased Property for each year during the Term or the
Extension Term (each such year a "Lease Year"), which Base Annual Rent shall
be subject to upward adjustment pursuant to Section 2.04. In the first Lease
Year, Base Annual Rent shall be in the amount set forth on SCHEDULE A (the
"Initial Base Annual Rent"), paid to Landlord in twelve equal monthly
installments.
2.02 PAYMENT. Tenant shall pay Landlord the Base Annual Rent as to the
Leased Property for each Lease Year, without notice, demand, set-off or
counterclaim in advance, in lawful money of the United States of America and
payable in consecutive monthly installments commencing on the Commencement
Date and thereafter on the first day of each month during the Term. Tenant
will, to the extent that such method of payment is compatible with its
business practices, make such payments by direct deposit of immediately
available funds to the account set forth in EXHIBIT 2.02 (which EXHIBIT 2.02
may be modified by Landlord from time to time upon Notice (as hereafter
defined) to Tenant).
2.03 SECURITY DEPOSIT. Prior to the Commencement Date, Tenant shall
deliver to Landlord an amount equal to one-twelfth (1/12th) of the Initial
Base Annual Rent, which amount shall be held by Landlord as security (the
"Security Deposit") for the performance of Tenant's payment and other
obligations under this Lease. Upon an Event of Default and the continuance
thereof, Landlord shall have the right, but not the obligation, to apply the
Security Deposit as set forth in Section 9.08. If Tenant has fully and
faithfully carried out all of the terms, covenants and conditions hereof,
Landlord shall return the Security Deposit, without interest, after
expiration of this Lease, or upon early terminati on of this Lease in
accordance with Article X, Article XI, or otherwise less any amounts that
Landlord may deduct from such Security Deposit for unpaid amounts due and
owing under this Lease at the time of termination. In the event that
Landlord eliminates its standard business policy of requiring security
deposits from tenants, then Landlord shall refund the Security Deposit to
Tenant within thirty (30) days of such policy change.
4
2.04 BASE ANNUAL RENT ADJUSTMENT.
(a) The Base Annual Rent shall be adjusted during the Lease Term
or the Extension Terms under the procedures set forth in
EXHIBIT 2.04 (the "Base Annual Rent Adjustment").
(b) As used in EXHIBIT 2.04, the "Index" shall mean the CPI-U
published by the United States Department of Labor, Bureau
of Labor Statistics Consumer Price Index for All Urban
Consumers, U.S. City Average. If at any time during the Term
or the Extension Term, as the case may be, the Index shall be
discontinued, Landlord shall select a substitute index, being
an existing official index published by the Bureau of Labor
Statistics or its successor or another, similar governmental
agency, which index is most nearly equivalent to the Index.
2.05 ADDITIONAL RENT. As to each Leased Property, in addition to the
Base Annual Rent, Tenant shall pay all other amounts, liabilities,
obligations and Impositions (as hereinafter defined) which Tenant assumes or
agrees to pay under this Lease and any fine, penalty, interest, charge and
cost which may be added for nonpayment or late payment of such items
(collectively, the "Additional Rent").
2.06 PLACE(S) OF PAYMENT OF RENT; DIRECT PAYMENT OF ADDITIONAL RENT.
The Base Annual Rent and Additional Rent are hereinafter referred to as
"Rent." Landlord shall have all legal, equitable and contractual rights,
powers and remedies provided in this Lease or by statute or otherwise in the
case of nonpayment of the Rent for each Leased Property. Tenant shall make
all payments of Rent at Landlord's address set forth in Section 17.01 or as
Landlord may otherwise from time to time direct in writing, or, if Landlord
shall direct Tenant, directly to a bank account specified by Landlord to
Tenant in writing. At the direction of the Landlord, Tenant shall make
payments of Additional Rent directly to the person or persons to whom such
amount is owing at the time and times when such payments are due, and Tenant
shall give to Landlord such evidence of such direct payments as Landlord
shall reasonably request.
2.07 NET LEASE. This Lease shall be deemed and construed to be an
"absolute net lease" or "triple net lease," (i.e. that Tenant shall pay all
costs and expenses related to the ownership and operations of each Leased
Property, thereby leaving all Rent as an absolutely net return to Landlord)
and as to each Leased Property, Tenant shall pay all Rent, Impositions, and
other charges and expenses in connection with such Leased Property throughout
the Term and any Extension Term, without abatement, deduction or set-off.
2.08 NO TERMINATION, ABATEMENT, ETC. Except as otherwise specifically
provided herein, Tenant shall remain bound by this Lease in accordance with
its terms. Except as otherwise
5
specifically provided herein, Tenant shall not, without the prior written
consent of Landlord, modify, surrender or terminate this Lease as to any
Leased Property, nor seek nor be entitled to any abatement, deduction,
deferment or reduction of Rent, or set-off against the Rent as to any Leased
Property for any reason whatsoever. Except as specifically provided herein,
the obligations of Landlord and Tenant shall not be affected by reason of:
(a) the lawful or unlawful prohibition of, or restriction upon, Tenant's use
of any Leased Property, or any part thereof, the interference with such use
by any person, corporation, partnership or other entity, or by reason of
eviction by paramount title; (b) any claim which Tenant has or might have
against Landlord or by reason of any default or breach of any warranty by
Landlord under this Lease or any other agreement between Landlord and Tenant,
or to which Landlord and Tenant are parties; (c) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding
up or other proceeding affecting Landlord or any assignee or transferee of
Landlord; (d) any damage to, or destruction of, any Leased Property or any
portion thereof for whatever cause, or any taking of the Leased Property or
any portion thereof; or (e) any other cause, whether similar or dissimilar to
any of the foregoing, other than a discharge of Tenant from any such
obligations as a matter of law. Except as otherwise specifically provided
herein, and to the maximum extent permitted by law, Tenant hereby
specifically waives all rights, including but not limited to any rights under
any statute relating to rights of tenants in the jurisdictions where the
Leased Properties are located, which may now be conferred upon it by law,
relating to: (a) the modification, surrender or termination of this Lease,
or the quitting or surrender of any Leased Property or any portion thereof;
(b) any abatement, reduction, suspension or deferment of the Rent or other
sums payable by Tenant hereunder; or (c) any rights of redemption. As to
each Leased Property, the obligations of Landlord and Tenant hereunder shall
be separate and the Rent and all other sums shall continue to be payable in
all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease or by termination of this
Lease other than by reason of an Event of Default.
ARTICLE III
IMPOSITIONS AND UTILITIES
3.01 PAYMENT OF IMPOSITIONS. Subject to the adjustments set forth
herein, Tenant shall pay, in the manner set forth in Section 3.04, as
Additional Rent, to the Landlord an amount equal to the amount necessary to
pay all Impositions (as hereinafter defined) that may be levied or become a
lien on any Leased Property or any part thereof at any time (whether prior to
or during the Term), without regard to prior ownership of said Leased
Property, before the same becomes delinquent; provided that Tenant shall be
permitted to request from the taxing authority or other assessing authority
that payment of the Impositions be amortized over the greatest allowable
period; and further provided that Tenant shall be required to pay only such
Impositions as actually become due and payable during the Term or any
Extension Term of the Lease. Tenant's obligation to pay such Impositions
shall be deemed absolutely fixed upon the date such Impositions become a lien
upon any Leased Property or any part thereof. Tenant, at its expense, shall
prepare and file all tax returns and reports in respect of any Imposition as
may be required by governmental authorities, provided, however, that Tenant
shall provide to Landlord copies of all filings of such tax returns or
6
reports in respect of any real or personal property owned by Landlord.
Tenant shall be entitled to any refund due in respect of such Impositions
from any taxing authority if no Event of Default shall have occurred
hereunder and be continuing. Any refunds in respect of such Impositions
retained by Landlord due to an Event of Default shall be applied as provided
in Section 9.08. Landlord and Tenant shall, upon request of the other,
provide such data as is maintained by the party to whom the request is made
with respect to a Leased Property as may be necessary to prepare any required
tax returns and reports. In the event governmental authorities classify any
property covered by this Lease as personal property, Landlord and Tenant
shall file all personal property tax returns in such jurisdictions where it
may legally so file with respect to their respective owned personal property.
Landlord, to the extent it possesses the same, and Tenant, to the extent it
possesses the same, will provide the other party, upon request, with cost and
depreciation records necessary for filing such returns or reports for any
property so classified as personal property. To the extent that Landlord is
legally required to file personal property tax returns, Tenant will be
provided with copies of assessment notices indicating a value in excess of
the reported value in sufficient time for Tenant to file a protest. Tenant
may, upon notice to Landlord, at Tenant's option and at Tenant's sole cost
and expense, protest, appeal, or institute such other proceedings as Tenant
may deem appropriate to effect a reduction of real estate or personal
property assessments and Landlord, at Tenant's expense as aforesaid, shall
fully cooperate with Tenant in such protest, appeal, or other action. Tenant
shall provide Landlord copies of all materials filed or presented in
connection with any such proceeding. Tenant shall promptly reimburse
Landlord for all taxes paid by Landlord, which were not paid with deposits
received from Tenant, upon receipt of xxxxxxxx accompanied by copies of a
xxxx therefor and payments thereof which identify the property with respect
to which such payments are made. Impositions imposed with respect to the
tax-fiscal period during which the Term commences and terminates as to each
Leased Property shall be adjusted and prorated between Landlord and Tenant on
a per diem basis, with Tenant being obligated to pay its pro rata share from
and including the Commencement Date to and including the expiration or
termination date of the Term or Extension Term, as the case may be, whether
or not such Imposition is imposed before or after such commencement or
termination, and Tenant's obligation to pay its prorated share thereof shall
survive such termination. Tenant shall also pay to Landlord a sum equal to
the amount which Landlord may be caused to pay of any privilege tax, sales
tax, gross receipts tax, rent tax, occupancy tax or like tax (excluding any
tax based on net income), hereinafter levied, assessed, or imposed by any
federal, state, city, county or municipal or other local governmental
authority, or any subdivision thereof, upon or measured by rent or other
consideration required to be paid by Tenant under this Lease.
3.02 DEFINITION OF IMPOSITIONS. "Impositions" means, collectively: (a)
taxes (including without limitation, all real estate and personal property ad
valorem (whether assessed as part of the real estate or separately assessed
as unsecured personal property), sales and use, business or occupation,
single business, gross receipts, transaction, privilege, rent or similar
taxes, but not including income or franchise or excise taxes payable with
respect to Landlord's receipt of Rent); (b) assessments, whether in the
nature of a special assessment or otherwise (including, without limitation,
all assessments for public improvements or benefits, whether or not commenced
or completed prior to the date hereof and whether or not to be completed
within the Term or any Extension Term, as the case may be), provided that all
assessments shall be paid over the longest
7
amortization period available without causing a penalty or the accrual of
interest; (c) ground rents, water, sewer or other rents and charges, excises,
tax levies, and fees (including, without limitation, license, permit,
inspection, authorization and similar fees); (d) to the extent they may
become a lien on a Leased Property, all taxes imposed on Tenant's operations
of such Leased Property including without limitation, Tenant's or Affiliates
of Tenant's employee withholding taxes, income taxes and intangible taxes;
and (e) all other governmental charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforseen, of every
character in respect of each Leased Property or any part thereof, the
Business conducted by Tenant thereon, and/or the Rent (including all interest
and penalties thereon due to any failure in payment by Tenant), which at any
time prior to, during or in respect of the Term or any Extension Term, as the
case may be, hereof may be assessed or imposed on or in respect of or be a
lien upon (i) Landlord or Landlord's interest in any Leased Property or any
part thereof; (ii) any Leased Property or any part thereof or any rent
therefrom or any estate, right, title or interest therein; or (iii) any
occupancy, operation, use or possession of, or sales from, or activity
conducted on, or in connection with any Leased Property or the leasing or use
of any Leased Property or any part thereof. Tenant shall not, however, be
required to pay: (x) any tax based on net income (whether denominated as a
franchise or capital stock or other tax) imposed on Landlord or (y) except as
provided in Section 13.01, any tax imposed with respect to the sale, exchange
or other disposition by Landlord of a Leased Property or the proceeds
thereof; provided, however, that if any tax, assessment, tax levy or charge
which Tenant is obligated to pay pursuant to the first sentence of this
definition and which is in effect at any time during the Term hereof is
totally or partially repealed, and a tax, assessment, tax levy or charge set
forth in clause (x) or (y) immediately above is levied, assessed or imposed
expressly in lieu thereof Tenant shall then pay such tax, levy, or charge set
forth in said clause (x) or (y).
3.03 UTILITIES. Tenant shall contract for, in its own name, and will
pay, as Additional Rent all taxes, assessments, charges/deposits, and bills
for utilities, including without limitation charges for water, gas, oil,
sanitary and storm sewer, electricity, telephone service, trash collection,
and all other utilities which may be charged against the occupant of the
Improvements during the Term. Tenant shall at all times maintain that amount
of heat necessary to ensure against the freezing of water lines. Tenant
hereby agrees to indemnify and hold Landlord harmless from and against any
liability or damages to the utility systems of each Leased Property that may
result from Tenant's failure to maintain sufficient heat in the Improvements
therefor.
3.04 ESCROW OF IMPOSITIONS. If Tenant is in default under this Lease
beyond any applicable cure period, Tenant shall thereafter deposit with
Landlord on the first day of each month during the Term hereof and any
Extension Term, as the case may be, a sum equal to one-twelfth (1/12th) of
the Impositions assessed against such Leased Property which sums shall be
used by Landlord toward payment of such Impositions. If, at the end of any
applicable tax year, any such funds held by Landlord are insufficient to make
full payment of taxes or other Impositions for which such funds are held,
Tenant, on demand, shall pay to Landlord any additional funds necessary to
pay and discharge in full the obligations of Tenant pursuant to the
provisions of this Section. If, however, at the end of any applicable tax
year, such funds held by Landlord are in excess of the total payment required
to satisfy taxes or other Impositions for which such funds are held, Landlord
shall
8
apply such excess amounts to a tax and Imposition escrow fund for the next
tax year. With respect to each Leased Property, if any such excess exists
following the expiration or earlier termination of this Lease, and subject to
Section 8.08 below, Landlord shall promptly refund such excess amounts to
Tenant. The receipt by Landlord of the payment of such Impositions by and
from Tenant shall only be as an accommodation to Tenant and the taxing
authorities, and shall not be construed as rent or income to Landlord,
Landlord serving, if at all, only as a conduit for delivery purposes.
3.05 DISCONTINUANCE OF UTILITIES. Landlord will not be liable for
damages to person or property or for injury to, or interruption of, business
for any discontinuance of utilities at any Leased Property nor will such
discontinuance in any way be construed as an eviction of Tenant from such
Leased Property or cause an abatement of Rent as to such Leased Property or
operate to release Tenant from any of Tenant's obligations as to such Leased
Property under this Lease. Notwithstanding the forgoing, however, Landlord
shall be liable for damages to person or property or for injury to, or
interruption of business, for any discontinuance of utilities at any Leased
Property, in the event and to the extent, such damages or injury are caused
by the gross negligence or wilful misconduct of the Landlord.
3.06 LIENS. Subject to Section 17.19 relating to contests, Tenant shall
not directly or indirectly create or allow to remain, and will promptly
discharge at its expense, any lien, encumbrance, attachment, title retention
agreement or claim upon any Leased Property or any attachment, levy, claim or
encumbrance in respect of any Rent provided under this Lease, not including,
however: (a) this Lease; (b) utility easements and road rights-of-way in the
customary form (i) provided the same do not adversely affect the intended use
of the Leased Properties (including the Improvements) and do not create a
material adverse effect on the value of the Leased Properties or (ii) which
result solely from the action or inaction of Landlord; (c) zoning and
building laws or ordinances, provided they do not prohibit the use of the
Leased Properties for the Business and so long as the Leased Properties are
in compliance with same; (d) such encumbrances as are subsequently consented
to in writing by Landlord, but excluding liens in respect of Impositions
required to be paid under Section 3.01; (e) liens for Impositions so long as
(i) the same are not yet payable or are payable without the addition of any
fine or penalty or (ii) such liens are being contested as permitted under
Section 17.19; and (f) other encumbrances, easements, rights of way or liens
(i) provided the same do not adversely affect the intended use of the Leased
Properties (including the Improvements) and do not create a material adverse
effect on the value of the Leased properties, or (ii) which result solely
from the action or inaction of Landlord.
3.07 TAX STATEMENTS. Tenant shall immediately after the Commencement
Date notify the appropriate taxing authorities in the jurisdiction in which
the Leased Properties are situated that all tax statements, assessments and
bills for Impositions shall be delivered directly to Tenant for payment.
Tenant shall deliver to Landlord copies of all statements of taxes, special
assessments or other Impositions within ten (10) days of Tenant's receipt
thereof.
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ARTICLE IV
INSURANCE
4.01 INSURANCE. Tenant shall, at Tenant's expense, keep the
Improvements, Fixtures, and other components of each Leased Property insured
against the following risks:
(a) Loss or damage by fire with extended coverage (including
windstorm and subsidence), vandalism and malicious mischief,
sprinkler leakage and all other physical loss perils commonly
covered by "All Risk" insurance in an amount not less than one
hundred percent (100%) of the then full replacement cost thereof
(as hereinafter defined). Such policy shall include an agreed
amount endorsement if available at a reasonable cost. Such
policy shall also include endorsements for contingent liability
for operation of building laws, demolition costs, and increased
cost of construction.
(b) Loss or damage by explosion of steam boilers, pressure vessels,
or similar apparatus, now or hereafter installed on any Leased
Property, in commercially reasonable amounts acceptable to
Landlord.
(c) [Intentionally Omitted]
(d) If the Land or any portion thereof related to a Leased Property
is located in whole or in part within a designated flood plain
area, loss or damage caused by flood in commercially reasonable
amounts acceptable to Landlord.
(e) Loss or damage commonly covered by blanket crime insurance
including employee dishonesty, loss of money orders or paper
currency, depositor's forgery, and loss of property accepted by
Tenant for safekeeping, in commercially reasonable amounts
acceptable to Landlord.
(f) Workers' compensation insurance as required by statute in respect
of any work or other operations on or about each Leased Property.
(g) Comprehensive liability insurance as to each Leased Property in
amounts equal to the greater of (i) One Million Dollars
($1,000,000) for each occurrence and Two Million Dollars
($2,000,000) in the aggregate, or (ii) the limits of liability
generally required under the franchise agreements or other
agreements pursuant to which Tenant operates the Businesses
conducted on or about each Leased Property.
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(h) Commercial comprehensive catastrophic liability insurance with
limits of liability of not less than the greater of (i) Five
Million ($5,000,000) and (ii) the limits of liability generally
required under the franchise agreements or other agreements
pursuant to which Tenant operates the Businesses conducted on or
about each Leased Property.
(i) upon Landlord's request if such insurance is customary in the
region in which the Leased Property is situated, earthquake
insurance in an amount not less than the full insurable value of
each Leased Property.
(j) During the period when any addition, alteration, construction,
installation or demolition is being made or performed to any part
of the Leased Property, contingent liability, public liability,
completed value, builder's risk (non-reporting form) workers'
compensation and other insurance as is deemed reasonably prudent
by Landlord.
4.02 INSURANCE LIMITS. Deductible provisions for the insurance required
under Section 4.01(a) shall not exceed Twenty-Five Thousand Dollars ($25,000)
per location per occurrence and One Hundred Thousand Dollars ($100,000)
aggregate per occurrence; under clause(d), Twenty-Five Thousand Dollars
($25,000) per occurrence, except that if federal flood insurance is available
then such deductible shall not be greater than the lowest deductible available
with respect to such federal flood insurance; under clause (g), Fifty Thousand
Dollars ($50,000) per occurrence; under clause (h), Twenty-Five Thousand Dollars
($25,000) per occurrence; and under clause (j), Twenty-Five Thousand Dollars
($25,000) per occurrence.
4.03 INSURANCE REQUIREMENTS. The following provisions shall apply to all
insurance coverages required hereunder:
(a) The carriers of all policies shall have a Best's Rating of "A-"
or better and a Best's Financial Category of XII or larger and
shall be authorized to do insurance business in the jurisdiction
in which the Leased Property is located.
(b) Tenant shall be the "named insured" and Landlord and any
mortgagee of Landlord shall be an "additional named insured" on
each policy with respect to such mortgagee's and the Landlord's
interest in the Leased Property, except the coverages required
under Section 4.01(f) hereto.
(c) Tenant shall deliver to Landlord certificates or policies showing
the required coverages and endorsements. Each policy or
certificate of insurance shall provide that such policy or
certificate (i) may not be
11
canceled, (ii) may not lapse for failure to renew, and (iii)
no material change or reduction in coverage may be made,
without at least thirty (30) days' prior written notice to
Landlord.
(d) The policies shall contain a severability of interest and/or
cross-liability endorsement, provide that the acts or omissions
of Tenant will not invalidate Landlord's coverage, and provide
that Landlord shall not be responsible for payment of premiums.
(e) All loss adjustment shall require the written consent of Landlord
and Tenant, as their interests may appear.
(f) At least (30) thirty days prior to the expiration of each policy,
Tenant shall deliver to Landlord a certificate showing renewal of
such policy and payment of the annual premium therefor.
Landlord shall have the right to review the insurance coverages required
hereunder with Tenant from time to time, to obtain the input of third party
professional insurance advisors (at Landlord's expense) with respect to such
insurance coverages, and to consult with Tenant in Tenant's annual review and
renewal of such insurance coverages. All insurance coverages hereunder shall
be in such form, substance and amounts as are customary or standard in
Tenant's industry, but at a minimum shall comply with the requirements set
forth herein.
4.04 REPLACEMENT COST. The term "full replacement cost" means the
actual replacement cost of the Improvements from time to time including
increased cost of construction, with no reductions or deductions. Tenant
shall, not later than thirty (30) days after the anniversary of each policy
of insurance, increase the amount of the replacement cost endorsement for the
Improvements to the extent necessary to reflect increased costs of
construction. If Tenant makes any Permitted Alterations (as hereinafter
defined) to any Leased Property, Landlord may have such full replacement cost
redetermined at any time after such Permitted Alterations are made,
regardless of when the full replacement cost was last determined.
4.05 BLANKET POLICY. Tenant may carry the insurance required by this
Article under a blanket policy of insurance, provided that the coverage
afforded Tenant will not be reduced or diminished or otherwise be different
from that which would exist under a separate policy meeting all of the
requirements of this Lease and the Landlord approves the form of the policy.
4.06 NO SEPARATE INSURANCE. Tenant shall not take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article, or increase the amounts of any then existing
insurance by securing an additional policy or additional policies, unless all
parties having an insurable interest in the subject matter of the insurance,
including Landlord and any mortgagees, are included therein as additional
named insureds or loss payees, the loss is payable under said insurance in
the same manner as losses are payable under this Lease, and
12
such additional insurance is not prohibited by the existing policies of
insurance required pursuant to this Article. Tenant shall immediately notify
Landlord of the taking out of such separate insurance or the increasing of
any of the amounts of the existing insurance by securing an additional policy
or additional policies. The term "mortgages" as used in this Lease includes,
but is not limited to, Deeds of Trust and the term "mortgagees" includes, but
is not limited to, trustees and beneficiaries under a Deed of Trust.
4.07 WAIVER OF SUBROGATION. Each party hereto hereby waives any and
every claim which arises or may arise in its favor and against the other
party hereto during the Term or any Extension Term or renewal thereof, for
any and all loss of, or damage to, any of its property located within or
upon, or constituting a part of, any Leased Property, which loss or damage is
covered by valid and collectible insurance policies, to the extent that such
loss or damage is recoverable in full under such policies. Said mutual
waiver shall be in addition to, and not in limitation or derogation of, any
other waiver or release contained in this Lease with respect to any loss or
damage to property of the parties hereto. Inasmuch as the said waivers will
preclude the assignment of any aforesaid claim by way of subrogation (or
otherwise) to an insurance company (or any other person), each party hereto
agrees immediately to give each insurance company which has issued to it
policies of insurance, written notice of the terms of said mutual waivers,
and to have such insurance policies properly endorsed, if necessary, to
prevent the invalidation of said insurance coverage by reason of said
waivers, so long as such endorsement is available at a reasonable cost.
4.08 MORTGAGES. The following provisions shall apply if Landlord at the
Commencement Date or thereafter places a mortgage on any Leased Property or
any part thereof: (a) Tenant shall obtain a standard form of mortgage clause
insuring the interest of the mortgagee; (b) Tenant shall deliver evidence of
insurance to such mortgagee; (c) loss adjustment shall require the consent of
the mortgagee but such consent shall not be unreasonably withheld and may not
include any requirement that the funds be paid to mortgagee in lieu of
reconstruction; and (d) Tenant shall obtain such other coverages and provide
such other information and documents as may be reasonably required by the
mortgagee. Tenant shall be required to pay for the cost of the mortgage
clause insuring the interest of the mortgagee only if Landlord places a
mortgage on a Leased Property at the Commencement Date.
4.09 OTHER INSURANCE REQUIREMENTS. Notwithstanding anything in this
Lease to the contrary and not by way of limitation, in addition to the types
and amounts of insurance required to be carried by Tenant herein, Tenant
covenants to insure and continue in effect such types and amounts of
insurance as the Tenant shall be required to carry pursuant to any contract,
agreement, instrument, statute, law, rule or regulation relating to the use
of the Leased Property and the operations of any Business or other activities
thereon, including noncancellable written notice to mortgagee.
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ARTICLE V
INDEMNITY; SUBSTANCES OF CONCERN
5.01 TENANT'S INDEMNIFICATION. Subject to Section 4.07, Tenant hereby
agrees to indemnify and hold harmless Landlord, its agents, and employees
from and against any and all demands, claims, causes of action, fines,
penalties, damages (including punitive and consequential damages), losses,
liabilities (including strict liability), judgments, costs and expenses
(including, without limitation, attorneys' fees, court costs, and the costs
set forth in Section 9.06) (the "Claims") incurred in connection with or
arising from: (a) the use, condition, operation or occupancy of the Leased
Properties; (b) any activity, work, or thing done, or permitted or suffered
by Tenant in, on or about the Leased Properties; (c) any acts, omissions, or
negligence of Tenant or any person claiming under Tenant, or the contractors,
agents, employees, invitees, or visitors of Tenant or any such person; (d)
any breach, violation, or nonperformance by Tenant or any person claiming
under Tenant or the employees, agents, contractors, invitees, or visitors of
Tenant or of any such person, of any term, representation, warranty,
covenant, or provision of this Lease or any law, ordinance, or governmental
requirement of any kind; (e) any injury or damage to the person, property or
Business of Tenant, its employees, agents, contractors, invitees, visitors,
or any other person entering upon any Leased Property; (f) any accident,
injury to or death of persons or loss or damage to any item of property
occurring on or about any Leased Property; (g) any Environmental Law or any
pollution or other threat to human health or the environment at, arising out
of or relating to any Leased Property as set forth in Section 5.05, and (h)
any brokers' or agents' fees and commissions. If any action or proceeding is
brought against Landlord, its employees, or agents by reason of any such
demand, claim, or cause of action, Tenant, upon notice from Landlord, will
defend the same at Tenant's expense with counsel reasonably satisfactory to
Landlord. In the event Landlord reasonably determines that its interests and
the interests of Tenant in any such action or proceeding are not
substantially the same and that Tenant's counsel cannot adequately represent
the interests of Landlord therein, Landlord shall have the right to hire
separate counsel in any such action or proceeding and the reasonable costs
thereof shall be paid for by Tenant. Tenant's indemnification obligations
with respect to a Claim shall survive the expiration or earlier termination
of this Lease until the later of (i) two (2) years from the date hereof, or
(ii) the expiration of the period ninety (90) days after the date on which
Landlord has actual knowledge of the existence of such Claim, provided,
however, that Tenant's indemnification obligations shall survive the
expiration or earlier termination of this Lease until ninety (90) days after
the expiration of the applicable statute of limitations for Claims incurred
in connection with, arising out of, or related to (i) Section 5.01(g) or (ii)
the failure to pay, as provided for in this Agreement, any Imposition.
Nothing herein is intended to have Tenant indemnify or hold harmless Landlord
for any actions or failures to act by Landlord, its agents, employees,
servants and invitees.
5.02 SUBSTANCES OF CONCERN.
(a) For purposes of this Section 5:
(i) "Substances of Concern" means, without limitation,
chemicals, pollutants, contaminants, wastes, toxic
substances, radioactive materials or genetically modified
organisms, which are, have been or become regulated by any
federal,
14
state or local government authority including,without
limitation, (1) petroleum or any fraction thereof,
(2) asbestos, (3) any substance or material defined as a
"hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response Compensation and
Liability Act (42 U.S.C. Section 9601), or (4) any
substance or material defined as a "hazardous chemical"
pursuant to the federal Hazard Communication Standard
(29 C.F.R. Section 1910.1200).
(ii) "Environmental Laws" means all federal, state, local, and
foreign laws and regulations relating to pollution or
protection of human health or the environment (including,
without limitation, ambient air, surface water, ground
water, wetlands, land surface, subsurface strata, and indoor
and outdoor workplace), including, without limitation,
(1) laws and regulations relating to emissions, discharges,
releases, or threatened releases of Substances of Concern,
and (2) common law principles of tort liability.
(b) Tenant shall not, either with or without negligence, injure,
overload, deface, damage or otherwise harm any Leased Property or
any part or component thereof; commit any nuisance; permit the
emission of any Substances of Concern; allow the release or other
escape of any biologically or chemically active substances or
materials or other Substances of Concern so as to impregnate,
impair or in any manner affect, even temporarily, any element or
part of any Leased Property or neighboring property, or allow the
storage or use of such substances or materials in any manner not
sanctioned by law and by reasonable standards prevailing in the
automobile retail and related industries for the storage and use
of such substances or materials; nor shall Tenant permit the
occurrence of objectionable noise or odors; or make, allow or
suffer any waste whatsoever to any Leased Property. Landlord may
inspect each Leased Property from time to time, and Tenant will
cooperate with such inspections.
(c) Notwithstanding the foregoing, Tenant anticipates using, storing
and disposing of certain Substances of Concern in connection with
operation of its Business. Such Substances of Concern include,
but are not limited to, the following: motor oil, waste motor
oil and filters, transmission fluid, antifreeze, refrigerants,
waste paint and lacquer thinner, batteries, solvents, lubricants,
degreasing agents, gasoline and diesel fuels. Tenant shall
ascertain and comply fully with all applicable Environmental Laws
and environmental standards
15
and requirements set by federal, state or local laws, rules,
regulations or governmental directives related to the Leased
Properties or Tenant's use or occupancy of the Leased
Property ("Environmental Standards"), including but not
limited to any laws or standards (a) regulating the use,
storage, generation or disposal of Substances of Concern, (b)
regulating the monitoring or use of any underground or
aboveground storage tanks at the Leased Properties, or (c)
establishing any permitting, notification or reporting
requirements. As promptly as practicable after the
Commencement Date (but in no event later than 120 days
thereafter), Tenant shall establish and implement a program
of compliance with all applicable Environmental Laws and
Environmental Standards ("Environmental Compliance Program").
Tenant shall update such Environmental Compliance Program
every three (3) years during the Term. Tenant shall submit
its Environmental Compliance Program and each update thereto
to Landlord; provided, however, such submittal shall not
relieve Tenant of its obligations pursuant to this Section 5.
Tenant's Environmental Compliance Program shall include a
program for monitoring Tenant's compliance with Environmental
Laws and Environmental Standards and a plan for correcting
immediately any incident of noncompliance. Tenant shall
comply with its Environmental Compliance Program.
(d) In the event of any noncompliance with any Environmental Laws or
Environmental Standards or any spill, release or discharge of
Substances of Concern in a reportable quantity under federal,
state or local law, Tenant shall:
(i) give Landlord immediate notice of the incident by telephone
or facsimile, providing as much detail as possible. Such
notice shall be provided to Landlord's National Dealership
Real Estate Manager or to such other person as Landlord
shall designate in accordance with Section 16.01 below;
(ii) as soon as possible, but no later than seventy-two (72)
hours, after discovery of an incident of noncompliance,
submit a written report to Landlord, identifying the source
or case of the noncompliance or spill, release or discharge
(including the names and quantities of any Substances of
Concern involved) and the method or action required to
correct the problem; and
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(iii) cooperate with Landlord or its designated agents or
contractors with respect to the investigation and correction
of such problem.
Tenant shall also be solely responsible for providing any notice to
any federal, state or local governmental authority required by applicable
laws and regulations as a result of such incident.
5.03 AUDITS. Landlord shall have the right to conduct, at its expense,
periodic audits of Tenant's compliance with the Environmental Compliance Program
and management of Substances of Concern at the Leased Properties and/or periodic
tests of air, soil, surface water or groundwater at or near the Leased
Properties. Landlord shall not be obligated to provide Tenant with the results
of any audit or tests unless such results are the basis for a claim by Landlord
that Tenant has breached its obligations under this Lease or a demand by
Landlord that Tenant modify its Environmental Compliance Program or operations
or remediate or remove a spill, release or discharge of Substances of Concern in
accordance with Section 5.06 below. Tenant agrees promptly to modify its
Environmental Compliance Program or the conduct of its operations in accordance
with Landlord's reasonable recommendations directed at improvement of Tenant's
handling, use and disposal of Substances of Concern in, on or from any Leased
Property to bring Tenant into compliance with Environmental Laws. If, as a
result of an environmental audit performed by Landlord with respect to any
Leased Property, Landlord reasonably determines in its judgment that alterations
or improvements of equipment or buildings located on the Leased Property are
necessary to comply with Environmental Laws, Tenant shall perform such
alterations or improvements as are reasonable under the circumstances and pay
all costs and expenses relating thereto. If Tenant shall fail to pay any such
costs or expenses, Tenant shall deposit with Landlord the full amount necessary
to pay such costs in full within ten (10) days of Landlord's demand. Nothing
contained herein shall be construed to obligate or require Landlord to perform
any audits, tests, inquiry or investigation. Should Landlord elect or be
required to disclose to Tenant the results of any audit or tests, Landlord shall
not be liable in any way for the truth or accuracy of such information.
5.04 LANDLORD'S OPTION RE: COMPLIANCE. If Tenant, after notice from
Landlord, fails to comply with or perform any of its obligations pursuant to
this Section 5, including, but not limited to, obligations to clean up spills,
releases or discharges, Landlord may, but shall not be obligated to, perform
such obligations and Tenant shall pay Landlord within ten (10) days of demand
Landlord's costs therefor, including any overhead and administrative costs.
5.05 ENVIRONMENTAL INDEMNIFICATION. Tenant shall indemnify and hold
harmless Landlord from and against all demands, claims, causes of action, fines,
penalties, damages (including punitive and consequential damages), losses,
liabilities (including strict liability), judgments, and expenses (including,
without limitation, attorneys' fees, court costs, and the costs set forth in
Section 9.06) imposed upon or asserted against Tenant, Landlord or any Leased
Property on account of any Environmental Law (irrespective of whether there has
occurred any violation of any Environmental Law) relating to any Leased
Property, including (a) response costs and costs of removal and remedial
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action incurred by the United States Government or any state or local
governmental unit to any other person or entity, or damages from injury to or
destruction or loss of natural resources, including the reasonable costs of
assessing such injury, destruction or loss, incurred pursuant to any
Environmental Law, (b) costs and expenses of abatement, investigation,
removal, remediation, correction or cleanup, fines, damages, response costs
or penalties which arise from the provisions of any Environmental Law, (c)
liability for personal injury or property damage arising under any statutory
or common-law tort theory, including damages assessed for the maintenance of
a public or private nuisance or for carrying on of a dangerous activity, (d)
liability by reason of a breach of an environmental representation or
warranty by Tenant, and (e) failure of Tenant to complete in a timely manner
alterations or improvements of equipment or buildings located on the Leased
Property deemed necessary or advisable by Landlord pursuant to Section 5.03
in a manner acceptable to Landlord.
5.06 TENANT'S CLEANUP OBLIGATION. If any spill, release or discharge of
Substances of Concern occurs on, at or from the Leased Properties during the
Term, Tenant shall promptly take all actions, at its sole expense, as are
necessary to remove or remediate such spill, release or discharge and to
return the Leased Property to the condition existing prior to the
introduction of any such Substances of Concern to the Leased Property,
provided that Landlord's approval of such action shall first be obtained,
which approval shall not be unreasonably withheld so long as such actions
would not potentially have any material adverse effect on the Leased
Property.
5.07 EXISTING ENVIRONMENTAL CONDITIONS. Tenant acknowledges that it has
had the opportunity to review the Environmental Reports attached hereto as
EXHIBIT 5.07. Tenant hereby represents that it has reviewed and is aware of
the matters disclosed in the Environmental Reports.
As a material consideration for Landlord's willingness to enter
into this Lease, Tenant, for itself and its Affiliates, and each of their
shareholders, directors, officers, employees, agents, contractors,
representatives, insurers, successors and assigns hereby waives and releases
Landlord and its Affiliates and each of their shareholders, directors,
officers, employees, representatives, agents, contractors, representatives,
insurers, successors and assigns from any and all claims, demands,
liabilities, costs, expenses, causes of action and rights of action
whatsoever, past, present or future, known or unknown, suspected or
unsuspected, which arise out of or relate in any way to the violation of
Environmental Laws or the use, storage, treatment, disposal, presence, spill,
release, or discharge of Substances of Concern at, on or from the Leased
Properties before the Commencement Date (collectively, the "Released Claims").
In the event that Landlord is ordered by a governmental agency, or
determines that it is in its best interest, to remedy any violation of
Environmental Laws or to remove or remediate any Substances of Concern
present on, under or about the Leased Properties on the Commencement Date, or
spilled, released or discharged on, at or from the Leased Properties before
the Commencement Date, Tenant shall immediately upon notice from Landlord
take all actions, at Tenant's sole expense, to promptly complete such removal
or remediation.
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5.08 SURVIVAL OF TENANT'S OBLIGATIONS. Tenant's obligations under this
Section 5 shall survive the expiration or earlier termination of this Lease.
During any period of time employed by Tenant after the termination of this
Lease to complete the removal from the Leased Property of any Substances of
Concern, if the premises are not rentable for uses contemplated under this
Lease, Tenant shall continue to pay the full amount of Rent due under this
Lease, which Rent shall be prorated daily for the final month of such period
of time.
ARTICLE VI
USE AND ACCEPTANCE OF PREMISES
6.01 USE OF LEASED PROPERTIES. For so long as this Lease is in effect
(including following any sublease or assignment thereof), Tenant shall use
and occupy each Leased Property exclusively for the purpose of conducting the
Business or for any other legal purpose for which such Leased Property is
being used as of the Commencement Date, and for no other purpose without the
prior written consent of Landlord. Tenant shall obtain and maintain all
approvals, licenses, and consents needed to use and operate the Leased
Properties for such purposes. Tenant shall promptly deliver to Landlord
complete copies of surveys, examinations, certification and licensure
inspections, compliance certificates, and other similar reports issued to
Tenant by any governmental agency.
6.02 ACCEPTANCE OF LEASED PROPERTIES. Except as otherwise specifically
provided in this Lease, Tenant acknowledges (i) Tenant and its agents have
had an opportunity to inspect each Leased Property; (ii) Tenant has found
each Leased Property fit for Tenant's use; (iii) delivery of each Leased
Property to Tenant is in an "as-is" condition; (iv) Landlord is not obligated
to make any improvements or repairs to any Leased Property; and (v) the roof,
walls, foundation, heating, ventilating, air conditioning, telephone, sewer,
electrical, mechanical, utility, plumbing, and other portions of each Leased
Property are in good working order. Tenant waives any claim or action
against Landlord with respect to the condition of any Leased Property.
LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT
OF THE LEASED PROPERTIES OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR
USE, DESIGN OR CONDITION OR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO
QUALITY OR THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
6.03 CONDITIONS OF USE AND OCCUPANCY. Tenant agrees that during the
Term it shall use and keep each Leased Property in a careful, safe and proper
manner; not commit or suffer waste thereon; not use or occupy any Leased
Property for any unlawful purposes; not use or occupy any Leased Property or
permit the same to be used or occupied, for any purpose or business deemed
extra hazardous on account of fire or otherwise; keep each Leased Property in
such repair and condition as may be required by the local board of health, or
other city, state or federal authorities, free of all cost to Landlord; not
permit any acts to be done which will cause the cancellation, invalidation,
or suspension of any insurance policy; and permit Landlord and its agents to
enter upon each Leased Property at all reasonable times after notice to
Tenant to examine the condition thereof.
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In addition, at any time and from time to time upon not less than fifteen
(15) days prior written notice, Tenant shall permit Landlord and any
mortgagee or lender and their authorized representatives, to inspect the
Leased Properties during normal Business hours, provided that such
inspections shall not unreasonably interfere with Business of Tenant.
6.04 FINANCIAL STATEMENTS AND OTHER INFORMATION. Tenant shall provide
Landlord and any mortgagee or lender regularly (or more often as may be
reasonably requested by Landlord in writing), the following financial
information from Cross-Continent Auto Retailers, Inc. ("C-CAR"): (a) as to
each Leased Property within thirty (30) days after each fiscal quarter during
the Term or any Extension Term, as the case may be, (except the fourth
quarter), C-CAR-prepared financial statements prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied; and
(b) as to each Leased Property and C-CAR, Tenant shall use its best efforts
to provide Landlord within ninety (90) days after the end of each fiscal year
of Tenant during the Term or any Extension Term, as the case may be, and in
no event later than one hundred and twenty (120) days after the end of each
fiscal year of Tenant during the Term or any Extension Term, as the case may
be, financial statements, audited, reviewed or compiled by a certified public
accountant (the "Annual Financial Statements"). Tenant shall also deliver
to Landlord such additional financial information as Landlord may reasonably
request, provided the same is of a type normally maintained by C-CAR or can
be obtained without undue cost or burden on Tenant's personnel and does not
constitute information which Tenant reasonably determines to be proprietary
or confidential. Additionally, upon Landlord's request, Tenant shall provide
Landlord with copies of C-CAR's annual capital expenditure budgets for each
Leased Property and shall deliver quarterly any reports generated by Tenant
regarding maintenance and repairs of each Leased Property and statements
delivered by Tenant to its automobile franchisors.
ARTICLE VII
REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS
7.01 MAINTENANCE. Tenant shall maintain each Leased Property in good
order, repair and appearance, and repair each Leased Property, including without
limitation, all interior and exterior, structural and nonstructural repairs and
replacements to the roof, foundations, exterior walls, building systems, HVAC
systems, parking areas, sidewalks, water, sewer and gas connections, pipes, and
mains. Tenant shall pay as Additional Rent the full cost of such maintenance,
repairs, and replacements, and to the extent that Tenant has paid such costs
directly to third parties, Tenant shall receive a credit against Additional Rent
payments for such amounts. Tenant shall maintain all drives, sidewalks, parking
areas, and lawns on or about each Leased Property in a clean and orderly
condition, free of accumulations of dirt, rubbish, snow and ice. Tenant shall
permit Landlord to inspect each Leased Property at all reasonable times, and
shall implement all reasonable suggestions of Landlord as to the maintenance and
repair of each Leased Property.
7.02 COMPLIANCE WITH LAWS. Tenant shall comply with all laws, ordinances,
orders, rules, regulations, and other governmental requirements relating to the
use, condition, or
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occupancy of each Leased Property, whether now or hereafter enacted and in
force including without limitation: (a) licensure requirements for operation
of the Business; (b) requirements of any board of casualty insurance
underwriters or insurance service office for any other similar body having
jurisdiction over any Leased Property; (c) all zoning and building codes; and
(d) Environmental Laws. At Landlord's request, from time to time, Tenant
shall deliver to Landlord copies of certificates or permits evidencing
compliance with such laws, including without limitation, copies of any
applicable licenses, certificates of occupancy and building permits. Tenant
shall provide Landlord with copies of any notice from any governmental
authority alleging any non-compliance by Tenant or any Leased Property with
any of the foregoing requirements and such evidence as Landlord may
reasonably require of Tenant's remediation thereof. Tenant hereby agrees to
defend, indemnify and hold Landlord, its agents, and employees from and
against any and all demands, claims, causes of action, fines, penalties,
damages (including punitive and consequential damages), losses, liabilities
(including strict liability), judgments, costs and expenses (including,
without limitation, attorneys' fees, court costs, and the costs set forth in
Section 9.06) resulting from any failure by Tenant to comply with any laws,
ordinances, rules, regulations, and other governmental requirements.
7.03 REQUIRED ALTERATIONS. Tenant shall, at Tenant's sole cost and
expense, make any additions, changes, improvements or alterations to each
Leased Property, including structural alterations, which may be required by
any governmental authorities, including those required to continue to satisfy
any licensure requirements related to the operation of the Business, whether
such changes are required by Tenant's use, changes in the law, ordinances, or
governmental regulations, defects existing as of the date of this Lease, or
any other cause whatsoever. Tenant shall provide thirty (30) days prior
written notice to Landlord of any changes to a Leased Property pursuant to
this Section 7.03 which involve changes to the structural integrity thereof
or materially affect the operational capabilities thereof. All such
additions, changes, improvements or alterations shall be deemed to be a
Tenant Improvement and shall comply with all laws relating to such
alterations and with the provisions of Section 8.01.
7.04 MECHANICS' LIENS. Tenant shall have no authority to permit or
create a lien against Landlord's interest in any Leased Property, and Tenant
shall post notices or file such documents as may be required to protect
Landlord's interest in each Leased Property against liens. Tenant hereby
agrees to defend, indemnify, and hold Landlord harmless from and against any
mechanics' liens against any Leased Property by reason of work, labor
services or materials supplied or claimed to have been supplied on or to such
Leased Property. Tenant shall immediately remove, bond-off, or otherwise
obtain the release of any mechanics' lien filed against any Leased Property.
Tenant shall pay all expenses in connection therewith, including without
limitation, damages, interest, court costs and reasonable attorneys' fees.
7.05 REPLACEMENTS OF FIXTURES. Tenant shall not remove Fixtures from any
Leased Property except to replace such Fixtures with other items used for
similar or analogous purposes, which replacement items are of equal or greater
quality and value. Items being replaced by Tenant may be removed and shall
become the property of Tenant and items replacing the same
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shall be and remain the property of Landlord. Tenant shall execute, upon
written request from Landlord, any and all documents necessary to evidence
Landlord's ownership of the Fixtures and replacements therefor. Tenant may
not finance Fixture replacements by security agreement or equipment lease
unless: (a) Landlord has consented to the terms and conditions of the
equipment lease or security agreement; (b) the equipment lessor or lender has
entered into a non-disturbance agreement with Landlord upon terms and
conditions acceptable to Landlord, including without limitation (i) Landlord
shall have the right (but not the obligation) to assume such security
agreement or equipment lease upon the occurrence of an Event of Default by
Tenant hereunder; (ii) the equipment lessor or lender shall promptly notify
Landlord of any default by Tenant under the equipment lease or security
agreement and give Landlord a reasonable opportunity to cure such default;
and (iii) Landlord shall have the right to assign its rights under the
equipment lease, security agreement, or non-disturbance agreement; (c) the
equipment lessor or lender shall subordinate its security interest to the
security interest of any of Landlord's lessors, mortgagors or lenders,
whether now created or hereafter existing, and (d) Tenant shall, within ten
(10) days after receipt of an invoice from Landlord, reimburse Landlord for
all costs and expenses incurred in reviewing and approving the equipment
lease, security agreement, and non-disturbance agreement, including without
limitation, reasonable attorneys' fees and costs.
7.06 ENCROACHMENTS; RESTRICTIONS. If any of the Improvements shall, at
any time, encroach upon any property, street or right-of-way adjacent to a
Leased Property, or shall materially violate the agreements or conditions
contained in any restrictive covenant or other agreement affecting a Leased
Property, other than one which is created or consented to by Landlord without
Tenant's consent, or shall materially impair the rights of others under an
easement or right-of-way to which a Leased Property is subject, other than
one which is created or consented to by Landlord without Tenant's consent,
then promptly upon the request of Landlord or at the request of any person
affected by any such encroachment, violation or impairment, Tenant shall, at
its expense, subject to its right to contest the existence of any
encroachment, violation or impairment and in such case, in the event of an
adverse final determination, either (a) obtain valid and effective waivers or
settlements of all claims, liabilities and damages resulting from each such
encroachment, violation or impairment, whether the same shall affect Landlord
or Tenant or (b) make such changes in the Improvements and take such other
actions as shall be necessary to remove such encroachment and to end such
violation or impairment, including, if necessary, the alteration of
improvements. Any such alteration shall be made in conformity with the
requirements of Article VIII. For purposes of this Section 7.06,
"materially" shall mean any violation of restrictive covenants or agreements
or impairment of rights for which Landlord or Tenant receives any notice from
any person, entity, governmental authority or other source.
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ARTICLE VIII
ALTERATIONS AND SIGNS; TENANT'S PROPERTY;
CAPITAL ADDITIONS TO THE LEASED PROPERTIES
8.01 TENANT'S RIGHT TO CONSTRUCT. As to each Leased Property, during
the Term of this Lease or any Extension Term, as the case may be, so long as
no Event of Default shall have occurred and be continuing as to such Leased
Property, Tenant may make Capital Additions (as defined herein), or other
alterations, additions, changes and/or improvements to such Leased Property
as deemed necessary or useful to operate such Leased Property for Tenant's
Business (individually, a "Tenant Improvement," or collectively, the "Tenant
Improvements"). "Capital Additions" shall mean the construction of one or
more new buildings or one or more additional structures annexed to any
portion of any of the Improvements on a Leased Property, which are
constructed on any parcel or portion of the Land comprising a Leased
Property, including the construction of a new floor, or the repair,
replacement, restoration, remodeling or rebuilding of the Improvements or any
portion thereof on a Leased Property which are not normal, ordinary or
recurring to maintain such Leased Property. Except as otherwise agreed to by
Landlord herein or otherwise in writing, any such Tenant Improvement or
Capital Addition shall be made at Tenant's sole expense and shall become the
property of Landlord upon termination of this Lease. Unless made on an
emergency basis to prevent injury to person or property, as to each Leased
Property, Tenant must obtain Landlord's prior written approval, such approval
not to be unreasonably withheld or delayed, for any Capital Addition or for
any Tenant Improvement which is not a Capital Addition and which has a cost
of more than One Hundred Thousand Dollars ($100,000) or a cost which, when
aggregated with the costs of all such Tenant Improvements on such Leased
Property in a given Lease Year, would cause the total costs of all such
Tenant Improvements on such Leased Property to exceed Two Hundred Fifty
Thousand Dollars ($250,000). Additionally, in connection with any Tenant
Improvement, including any Capital Addition, Tenant shall provide Landlord
with copies of any plans and specification therefor, Tenant's budget relating
thereto, any required governmental permits or approvals, any construction
contracts or agreements relating thereto, and any other information relating
to such Tenant Improvement as Landlord shall reasonably request. In addition
to the preceding rights and obligations, Tenant or its franchisor may erect
on the Property the maximum amount of signage permitted by applicable laws.
8.02 SCOPE OF RIGHT. Subject to Section 8.01 herein and Section 7.03
concerning required alterations, at Tenant's cost and expense, Tenant shall
have the right to:
(a) seek any governmental approvals, including building permits,
licenses, conditional use permits and any certificates of need
that Tenant requires to construct any Tenant Improvement;
(b) erect upon each Leased Property such Tenant Improvements as
Tenant deems desirable;
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(c) make additions, alterations, changes and improvements in any
Tenant Improvement so erected; and
(d) engage in any other lawful activities that Tenant determines are
necessary or desirable for the development of each Leased
Property in accordance with the Tenant's Business;
provided, however, Tenant shall not make any Tenant Improvement which would, in
Landlord's reasonable judgment, impair the value of the Leased Property without
Landlord's prior written consent and provided, further that Tenant shall not be
permitted to create a mortgage, lien or any other encumbrance on any Leased
Property without Landlord's prior written consent.
8.03 COOPERATION OF LANDLORD. Landlord shall cooperate with Tenant and
take such actions, including the execution and delivery to Tenant of any
applications or other documents, reasonably requested by Tenant in order to
obtain any governmental permits, licenses or approvals sought by Tenant to
construct any Tenant Improvement within ten (10) business days following the
later of: (a) the date Landlord receives Tenant's request or (b) the date of
delivery of any such application or document to Landlord; provided, the taking
of such action by Landlord, including the execution of said applications or
documents, shall be without cost to Landlord (or if there is a cost to Landlord,
such cost shall be reimbursed by Tenant), shall not cause Landlord to be in
violation of any law, ordinance or regulation, and shall not be deemed a waiver
by Landlord of any of its rights or of any of Tenant's obligations, including
but not limited to indemnification.
8.04 COMMENCEMENT OF CONSTRUCTION. Tenant agrees that:
(a) Tenant shall diligently seek all governmental approvals relating
to the construction of any Tenant Improvement;
(b) Once Tenant begins the construction of any Tenant Improvement,
Tenant shall diligently oversee any such construction to
completion in accordance with applicable insurance requirements
and the laws, rules and regulations of all governmental bodies or
agencies having jurisdiction over the subject Leased Property;
(c) Landlord shall have the right at any time and from time to time
to post and maintain upon each Leased Property such notices as
may be necessary to protect Landlord's interest from mechanics'
liens, materialmen's liens or liens of a similar nature;
(d) Tenant shall not suffer or permit any mechanics' liens or any
other claims or demands arising from the work of construction of
any Tenant Improvement to be enforced against any Leased Property
or any part thereof, and Tenant agrees to hold Landlord, its
agents and
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employees and said Leased Property free and harmless from
all demands, claims, causes of action, fines, penalties,
damages (including punitive and consequential damages), losses,
liabilities (including strict liability), judgments, costs and
expenses (including, without limitation, attorneys' fees, court
costs, and the costs set forth in Section 9.06) incurred in
connection with or arising therefrom;
(e) All work shall be performed in a satisfactory and workmanlike
manner consistent with standards in the industry; and
(f) Subject to Section 8.08 in the case of Capital Additions, Tenant
shall not secure any construction or other financing for the
Tenant Improvements which is secured by a portion of any Leased
Property without Landlord's prior written consent, and any such
financing (i) shall not exceed the cost of the Tenant
Improvements, (ii) shall be subordinate to any mortgage or
encumbrance now existing or hereinafter created with respect to
such Leased Property, and (iii) shall be limited solely to
Tenant's interest in the subject Leased Property.
8.05 RIGHTS IN TENANT IMPROVEMENTS. Notwithstanding anything to the
contrary in this Lease, all Tenant Improvements existing on the Leased Property
or constructed upon each Leased Property pursuant to Section 8.01, any and all
subsequent additions thereto and alterations and replacements thereof shall be
the sole and absolute property of Tenant during the Term and any Extension Term,
as the case may be, of this Lease (in respect of such Leased Property). Upon
the expiration or early termination of this Lease in respect of a Leased
Property, all such Tenant Improvements located thereon shall become the property
of Landlord. Without limiting the generality of the foregoing, prior to the
expiration or early termination of this Lease in respect of a Leased Property,
Tenant shall be entitled to all federal and state income tax benefits associated
with all Tenant Improvements located on such Leased Property.
8.06 PERSONAL PROPERTY. Tenant shall install, place, and use on each
Leased Property such fixtures, furniture, equipment, inventory and other
personal property in addition to the Fixtures Tenant may, from time to time,
deem necessary or useful to operate such Leased Property in the operation of the
Business.
8.07 REQUIREMENTS FOR THE TENANT'S PERSONAL PROPERTY. Tenant shall comply
with all of the following requirements in connection with the Tenant's Personal
Property:
(a) RESERVED.
(b) The Tenant's Personal Property shall be installed in a good and
workmanlike manner, in compliance with all governmental laws,
25
ordinances, rules, and regulations and all insurance
requirements, and be installed free and clear of any mechanics'
liens.
(c) Tenant shall, at Tenant's sole cost and expense, maintain,
repair, and replace the Tenant's Personal Property.
(d) Tenant shall, at Tenant's sole cost and expense, keep the
Tenant's Personal Property insured against loss or damage by
fire, vandalism and malicious mischief, sprinkler leakage, and
other physical loss perils commonly covered by fire and extended
coverage, boiler and machinery, and difference in conditions
insurance (which insurance shall meet the requirements of Section
4.03 hereof) in an amount not less than the full replacement cost
thereof or such other amount as appears on a schedule submitted
by Tenant to Landlord, which schedule shall be subject to
Landlord's approval, and Tenant shall use the proceeds from any
such policy for the repair and replacement of such items of
Tenant's Personal Property; provided, however, that if Landlord
fails to object to the schedule so submitted by Tenant within
five (5) business days of Landlord's receipt of such schedule,
Landlord's approval of such schedule shall be deemed given.
(e) Tenant shall pay all Impositions and other taxes applicable to
Tenant's Personal Property.
(f) If Tenant's Personal Property is damaged or destroyed by fire or
otherwise, Tenant shall promptly repair or replace Tenant's
Personal Property unless Tenant is entitled to and elects to
terminate the Lease pursuant to Section 10.05.
(g) As to each Leased Property, unless an Event of Default (or any
event which, with the giving of notice or lapse of time, or both,
would constitute an Event of Default) has occurred and remains
uncured beyond any applicable grace period, Tenant may remove
Tenant's Personal Property from such Leased Property from time to
time provided that Tenant promptly repairs any damage to such
Leased Property resulting from the removal of Tenant's Personal
Property.
(h) As to each Leased Property, Tenant shall remove all of Tenant's
Personal Property upon the termination or expiration of the Lease
and shall promptly repair any damage to such Leased Property
resulting from the removal thereof to the reasonable satisfaction
of Landlord; provided, however, if Tenant fails to remove
Tenant's Personal Property from such Leased Property within
thirty (30) days after the
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termination or expiration of this Lease with respect
thereto, then Tenant shall be deemed to have abandoned
such items of Tenant's Personal Property, all of which
shall become the property of Landlord, and Landlord may
remove, store and dispose of such property and Tenant
shall have no claim or right against Landlord for such
property or the value thereof regardless of the
disposition thereof by Landlord. Tenant shall pay
Landlord, upon demand, all expenses incurred by Landlord
in removing, storing, and disposing of such items of
Tenant's Personal Property and repairing any damage
caused by such removal. Tenant's obligations hereunder
shall survive the termination or expiration of this Lease
as to such Leased Property.
(i) Tenant shall perform its obligations under any equipment lease or
security agreement for Tenant's Personal Property.
8.08 FINANCINGS OF CAPITAL ADDITIONS TO A LEASED PROPERTY. Landlord
may, but shall be under no obligation to, provide or arrange construction,
permanent or other financing for any Capital Addition proposed to be made to
a Leased Property by Tenant. Any financing so provided by Landlord shall be
made in accordance with, and subject to, a written Addendum to this Lease.
ARTICLE IX
DEFAULTS AND REMEDIES
9.01 EVENTS OF DEFAULT. The occurrence of any one or more of the following
shall be an event of default ("Event of Default") hereunder:
(a) Tenant fails to pay in full any installment of Rent, or any other
monetary obligation payable by Tenant to Landlord hereunder,
within ten (10) days after the due date thereof and after written
notice thereof and an opportunity to cure within a ten (10) day
period after such notice is given to Tenant by Landlord. In the
event of Tenant's failure to make timely payment of such
obligations two (2) times during any twelve (12) month period,
each subsequent such failure within the twelve (12) months
immediately following such second failure shall immediately
constitute an Event of Default, and Landlord shall not be
required to provide notice thereof, nor shall Tenant have any
further opportunity to cure such failure;
(b) Tenant fails to observe and perform any covenant (other than the
covenant in respect of insurance set forth in Article IV),
condition or agreement hereunder to be performed by Tenant
(except those
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described in Section 9.01(a) of this Lease) and such failure
continues for a period of thirty (30) days after written notice
thereof is given to Tenant by Landlord; or if, by reason of the
nature of such default, the same cannot with due diligence be
remedied within said thirty (30) days, such failure will not be
deemed to continue if Tenant proceeds promptly and with due
diligence to remedy the failure and diligently completes the
remedy thereof; provided, however, said cure period will not
extend beyond sixty (60) days if the facts or circumstances
giving rise to the default are creating a further harm to
Landlord or the subject Leased Property and Landlord makes a
good faith determination that Tenant is not undertaking
remedial steps that Landlord would cause to be taken if this
Lease were then to terminate;
(c) If Tenant: (i) admits in writing its inability to pay its debts
generally as they become due; (ii) files a petition in bankruptcy
or a petition to take advantage of any insolvency act; (iii)
makes an assignment for the benefit of its creditors; (iv) is
unable to pay its debts as they mature; (v) consents to the
appointment of a receiver of itself or of the whole or any
substantial part of its property; or (vi) files a petition or
answer seeking reorganization or arrangement under the federal
bankruptcy laws or any other applicable law or statute of the
United States of America or any state thereof;
(d) If Tenant, on insolvency proceedings or on a petition in
bankruptcy filed against it, is adjudicated as bankrupt or a
court of competent jurisdiction enters an order or decree
appointing, without the consent of Tenant, a receiver of Tenant
of the whole or substantially all of its property, or approving a
petition filed against it seeking reorganization or arrangement
of Tenant under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any
state thereof, and such judgment, order or decree is not vacated,
dismissed or set aside within sixty (60) days from the date of
the entry thereof, and within an additional thirty (30) days,
provided that under applicable laws, rules and regulations no
action can be taken within such thirty (30) day period by the
party obtaining such judgment, order or decree;
(e) If the estate or interest of Tenant in a Leased Property or any
part thereof is levied upon or attached in any proceeding and the
same is not vacated or discharged within fifteen (15) days after
commencement thereof (unless Tenant is contesting such lien or
attachment in accordance with this Lease) or if such estate or
interest
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of Tenant is assigned, conveyed or involuntarily transferred in
violation of this Lease;
(f) Any representation, warranty or covenant made by Tenant on behalf
of itself or an Affiliate in this Lease or in any certificate,
demand or request made pursuant hereto proves to be incorrect, in
any material respect, as of the date of issuance or making
thereof;
(g) Conviction of Tenant or an Affiliate of a crime or offense
constituting a felony in the jurisdiction in which committed or
under federal law which conviction results in the termination of
the franchise.
(h) Termination or relinquishment of the franchise or license
pursuant to which Tenant or an Affiliate conducts business on or
from any Leased Property, provided that such event shall not
constitute an Event of Default if (i) no other Event of Default
enumerated in this Section 9.01 shall occur and be continuing,
and (ii) at a date no later than twenty-four (24) months
following such date of termination or relinquishment, Tenant or
an Affiliate has entered into written new or amended franchises
or licenses for operation of motor vehicle retail or motor
vehicle related businesses at such Leased Property satisfactory
to Landlord in its discretion applying commercially reasonable
standards;
(i) Default, beyond any applicable cure period, under any franchise
or license pursuant to which Tenant or an Affiliate conducts
business at a Leased Property, if in the Landlord's judgment such
default in light of commercially reasonable standards and
industry practice would have a material adverse effect on the
Leased Property;
(j) A final, non-appealable judgment or judgments for the payment of
money not fully covered (excluding deductibles) by insurance is
rendered against Tenant and the same remains undischarged,
unvacated, unbonded, unappealed or unstayed for a period of
thirty (30) consecutive days, and within an additional thirty
(30) days, provided that under applicable laws, rules and
regulations no action can be taken within such thirty (30) day
period by the party obtaining such judgment, order or decree;
(k) Tenant shall fail to observe the covenant in respect to insurance
under Article IV provided Landlord shall have provided notice of
such failure to Tenant and Tenant shall have failed to cure such
failure within five (5) business days of such notice; or
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(l) Except after the effective date of a permitted assignment meeting
the requirements of Article XIII, if Tenant is liquidated or
dissolved, or begins proceedings toward liquidation or
dissolution, or in any manner permits the sale or divestiture of
substantially all of its assets.
9.02 REMEDIES. To the extent an Event of Default is applicable only to a
specific Leased Property or specific Leased Properties (in accordance with
Section 9.01 above), the remedies set forth herein shall be exercisable solely
with respect to such Leased Property or Leased Properties, and shall not be
exercisable with respect to any other Leased Property. To the extent an Event
of Default constitutes an Event of Default as to all of the Leased Properties
(in accordance with Section 9.01 above), the remedies set forth herein shall be
exercisable with respect to all of the Leased Properties. Subject to the
foregoing provisions, Landlord may exercise any one or more of the following
remedies upon the occurrence of an Event of Default:
(a) Landlord may terminate this Lease, exclude Tenant from possession
of the subject Leased Property and use reasonable efforts to
lease the subject Leased Property to others. If this Lease is
terminated pursuant to the provisions of this subparagraph (a)
with respect to one or more, but less than all, of the Leased
Properties identified on SCHEDULE A hereto, Tenant will remain
liable to Landlord for the Rent for all of the Leased Properties
identified on SCHEDULE A and other sums then due and for the
balance of the Term as if the Lease had not been terminated with
respect to the subject Leased Property, less the net proceeds, if
any, of any re-letting of the subject Leased Property by Landlord
subsequent to such termination, after deducting all Landlord's
expenses in connection with such re-letting, including without
limitation, the expenses set forth in Section 9.02(b)(ii) below.
Notwithstanding the termination of this Lease with respect to a
subject Leased Property, Tenant shall pay to Landlord all amounts
due as Rent, and such other amounts then due, under this Lease on
the days that such Rent and such other amounts become due and
payable as required by this Lease.
(b) Without demand or notice, Landlord may re-enter and take
possession of the subject Leased Property or any part thereof;
and repossess such Leased Property as of Landlord's former
estate; and expel Tenant and those claiming through or under
Tenant from such Leased Property; and, remove the effects of both
or either, without being deemed guilty of any manner of trespass
and without prejudice to any remedies for arrears of Rent or
preceding breach of covenants or conditions. If Landlord elects
to re-enter, as provided in this paragraph (b) or if Landlord
takes possession of such Leased Property pursuant to legal
proceedings or pursuant to any notice provided by law, Landlord,
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without terminating any portion of this Lease, shall use
reasonable efforts to re-let such Leased Property or any part of
such Leased Property, either alone or in conjunction with other
portions of the Improvements of which such Leased Property are a
part, in Landlord's name but for the account of Tenant, for such
term or terms (which may be greater or less than the period which
would otherwise have constituted the balance of the Term of this
Lease) and on such terms and conditions (which may include
concessions of free rent, and the alteration and repair of such
Leased Property) as Landlord, in its reasonable discretion, may
determine. Landlord may collect and receive the Rents for such
Leased Property. Unless Tenant can establish that Landlord's
efforts to re-let were unreasonable or that Landlord's efforts to
collect Rents were unreasonable, Landlord will not be responsible
or liable for any failure to re-let such Leased Property, or any
part of such Leased Property, or for any failure to collect any
Rent due upon such re-letting. No such re-entry or taking
possession of such Leased Property by Landlord will be construed
as an election on Landlord's part to terminate this Lease unless
a written notice of such intention is given to Tenant. No notice
from Landlord under this Lease or under a forcible entry and
detainer statute or similar law will constitute an election by
Landlord to terminate this Lease unless such notice specifically
says so. Landlord reserves the right following any such re-entry
or re-letting, or both, to exercise its right to terminate this
Lease by giving Tenant such written notice, and, in that event
such Lease will terminate as specified in such notice.
(c) If Landlord elects to take possession of a Leased Property
according to subparagraph (b) of this Section 9.02 without
terminating this Lease, Tenant will pay Landlord (A) the Rent and
other sums which would be payable under this Lease with respect
to such Leased Property if such repossession had not occurred,
less (B) the net proceeds, if any, of any re-letting of such
Leased Property after deducting all of Landlord's reasonable
expenses incurred in connection with such re-letting, including
without limitation, all reasonable repossession costs, brokerage
commissions, legal expense, attorneys' fees, expense of
employees, alteration, remodeling, repair costs, and expense of
preparation for such re-letting. If, in connection with any
re-letting, any resulting lease term for the subject Leased
Property extends beyond the existing Term or Extension Term, as
the case may be, or such Leased Property covered by such
re-letting includes areas which are not part of such Leased
Property, a fair apportionment of the Rent received from such
re-letting and the
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expenses incurred in connection with such re-letting will be
made in determining the net proceeds received from such
re-letting. In addition, in determining the net proceeds from
such re-letting, any rent concessions will be apportioned over
the term of the new lease. Tenant will pay such amounts to
Landlord monthly on the days on which the Rent and all other
amounts owing under this Lease would have been payable if
opssession had not been retaken, and Landlord will be entitled
to receive the rent and other amounts from Tenant on each such
day. Notwithstanding anything herein to the contrary, Landlord,
at its option, may collect and apply any Rent received from
such re-letting in accordance herewith and in such case shall
remit any balance thereof to Tenant. Landlord shall incur no
liability or obligation to Tenant arising out of the collection
or application of Rent by Landlord hereunder.
(d) Landlord may re-enter the applicable Leased Property and have,
repossess and enjoy such Leased Property as if this Lease had not
been made, and in such event, Tenant and its successors and
assigns shall remain liable for any contingent or unliquidated
obligations or sums owing at the time of such repossession.
(e) Landlord may take whatever action at law or in equity as may
appear necessary or desirable to collect the Rent and other
amounts payable hereunder with respect to the subject Leased
Property then due and thereafter to become due, or to enforce
performance and observance of any obligations, agreements or
covenants of Tenant under this Lease.
9.03 RIGHT OF SET-OFF. Landlord may, and is hereby authorized by
Tenant, at any time and from time to time, after advance notice to Tenant, to
set-off and apply any and all sums held by Landlord in respect of a Leased
Property, including all sums held in any escrow for Impositions, any
indebtedness of Landlord to Tenant, and any claims by Tenant against
Landlord, against any obligations of Tenant under this Lease in respect of
such Leased Property and against any claims by Landlord against Tenant,
whether or not Landlord has exercised any other remedies hereunder. Landlord
shall set-off and apply such sums first, to delinquent real estate taxes,
unless such taxes are being protested in good faith and no lien has attached
to any Leased Property with respect thereto, second, to currently due and
owing real estate taxes, and next, to other Tenant's obligations in the order
which Landlord may determine. The rights of Landlord under this Section are
in addition to any other rights and remedies Landlord may have against Tenant.
9.04 PERFORMANCE OF TENANT'S COVENANTS. Landlord may, without waiving
or releasing any obligation of Tenant, and without waiving or releasing any
obligation or default, perform any obligation of Tenant which Tenant has
failed to commence to perform within fifteen
32
(15) business days after Landlord has sent a written notice to Tenant
informing it of its specific failure (provided no such notice shall be
required if Landlord has previously notified Tenant of such failure under the
provisions of Section 9.01). In the event Landlord deems, in its discretion,
that Tenant's failure to perform such obligation has given rise to an
emergency situation, Landlord may perform such obligation without waiving or
releasing any obligation of Tenant, and without waiving or releasing any
obligation or default; provided, however, that Landlord shall notify Tenant
of such performance as soon as it is reasonably practicable to do so. Tenant
shall reimburse Landlord on demand, as Additional Rent, for any reasonable
expenditures thus incurred by Landlord and shall pay interest thereon at the
New York Prime Rate.
9.05 LATE CHARGE. Any payment not made by Tenant for more than five (5)
business days after the due date shall be subject to a late charge payable by
Tenant as Rent of four percent (4%) of the amount of such overdue payment.
Notwithstanding the foregoing, in the event that Tenant's payment is not made
more than five (5) business days after the due date more than two (2) times
during any twelve (12) month period, any such subsequent overdue payments
within the twelve (12) months immediately following such second failure shall
be subject to a late charge payable by Tenant as Rent of seven percent (7%)
of the amount of such overdue payment.
9.06 LITIGATION; ATTORNEYS' FEES. Within ten (10) business days after
Tenant has knowledge of any litigation or other proceeding related to or arising
out of this Agreement or the Leased Property in which claims are asserted in an
amount in excess of $50,000, that (1) may be instituted against Tenant, (2) may
be instituted against any Leased Property to secure or recover possession
thereof, or (3) may affect the title to or the interest of Landlord in any
Leased Property (other than litigation or proceedings relating to Landlord's
indebtedness on the Leased Property or claims caused solely by Landlord), Tenant
shall give written notice thereof to Landlord. In the event that Landlord
determines that Tenant has failed to give adequate cooperation or information
with respect to any such litigation, investigation, receivership,
administrative, bankruptcy, insolvency or other similar proceeding, Landlord
may, after notice to Tenant, undertake such investigation or proceeding and
Tenant shall pay all reasonable costs and expenses (the "Costs") related thereto
that are incurred by Landlord, whether or not Landlord has received notice from
Tenant of such investigation or proceeding, and whether or not an Event of
Default has actually occurred or has been declared and thereafter cured, which
Costs shall include, without limitation: (a) the reasonable fees, expenses, and
costs of any litigation, investigation, receivership, administrative,
bankruptcy, insolvency or other similar proceeding; (b) reasonable attorney,
paralegal, consulting and witness fees and disbursements; and (c) the reasonable
expenses, including, without limitation, lodging, meals, and transportation, of
Landlord and its employees, agents, attorneys, and witnesses in investigating or
preparing for litigation, administrative, bankruptcy, insolvency or other
similar proceedings and attendance at hearings, depositions, and trials in
connection therewith. Within ten (10) days of Landlord's presentation of an
invoice of Costs incurred by Landlord pursuant to the preceeding sentence or
otherwise incurred by Landlord in enforcing or preserving Landlord's rights
under this Lease, whether or not an Event of Default has actually occurred or
has been declared and thereafter cured, Tenant shall pay all such Costs. All
such Costs as incurred shall be deemed to be Additional Rent under this Lease.
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9.07 REMEDIES CUMULATIVE. The remedies of Landlord herein are
cumulative to and not in lieu of any other remedies available to Landlord at
law or in equity. The use of, or failure to use, any one remedy shall not be
taken to exclude or waive the right to use any other remedy.
9.08 ESCROWS AND APPLICATION OF PAYMENTS. As security for the
performance of its obligations hereunder, Tenant hereby assigns to Landlord
all its right, title and interest in and to all monies escrowed with Landlord
under this Lease and all deposits with utility companies, taxing authorities,
and insurance companies; provided, however, that Landlord shall not exercise
its rights hereunder with respect to any Leased Property until an Event of
Default has occurred in respect of such Leased Property. Any payments
received by Landlord under any provisions of this Lease during the existence,
or continuance of an Event of Default shall be applied to Tenant's
obligations, first, to delinquent real estate taxes, unless such taxes are
being protested in good faith and no lien has attached to any Leased Property
with respect thereto, second, to currently due and owing real estate taxes,
and next, to other Tenant's obligations in the order which Landlord may
determine.
9.09 POWER OF ATTORNEY. Tenant hereby irrevocably and unconditionally
appoints Landlord, or Landlord's authorized officer, agent, employee or
designee, as Tenant's true and lawful attorney-in-fact, to act, after an
Event of Default, for Tenant in Tenant's name, place, and stead, and for
Tenant's and Landlord's use and benefit, to execute, deliver and file all
applications and any and all other necessary documents or things, to effect a
transfer, reinstatement, renewal and/or extension of any and all licenses and
other governmental authorizations issued to Tenant in connection with the
Leased Properties (but not including permits or other licenses relating
solely to the operation of Tenant's Business thereon), and to do any and all
other acts incidental to any of the foregoing. Tenant irrevocably and
unconditionally grants to Landlord as its attorney-in-fact full power and
authority to do and perform, after an Event of Default, every act necessary
and proper to be done in the exercise of any of the foregoing powers as fully
as Tenant might or could do if personally present or acting, with full power
of substitution, hereby ratifying and confirming all that said attorney shall
lawfully do or cause to be done by virtue hereof. This power of attorney is
coupled with an interest and is irrevocable prior to the full performance of
Tenant's obligations hereunder.
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ARTICLE X
DAMAGE AND DESTRUCTION
10.01 GENERAL. Tenant shall notify Landlord if any Leased Property
is damaged or destroyed by reason of fire or any other cause. Tenant shall
promptly repair, rebuild, or restore such Leased Property, at Tenant's
expense, so as to make such Leased Property at least equal in value to such
Leased Property existing immediately prior to such occurrence and as nearly
similar to it in character as is practicable and reasonable. Before
beginning such repairs or rebuilding, or executing any contracts in
connection with such repairs or rebuilding, Tenant will submit for Landlord's
approval, which approval Landlord will not unreasonably withhold or delay,
complete and detailed plans and specifications for such repairs or
rebuilding. Promptly after receiving Landlord's approval of the plans and
specifications, Tenant will begin such repairs or rebuilding and will oversee
the repairs and rebuilding to completion with diligence, subject, however, to
strikes, lockouts, acts of God, embargoes, governmental restrictions, and
other causes beyond Tenant's reasonable control. Landlord will make available
to Tenant the net proceeds of any fire or other casualty insurance paid to
Landlord for such repair or rebuilding as the same progresses, less (if
Landlord has accrued collection costs after Tenant has failed to diligently
pursue collection of such insurance proceeds) any reasonable costs of
collection, including attorney's fees. Payment will be made against
properly certified vouchers of a competent architect in charge of the work
and approved by Landlord. Prior to commencing the repairing or rebuilding,
Tenant shall deliver to Landlord for Landlord's approval a schedule setting
forth the estimated monthly draws for such work. Landlord will contribute to
such payments out of the insurance proceeds an amount equal to the proportion
that the total net amount received by Landlord from insurers bears to the
total estimated cost of the rebuilding or repairing, multiplied by the
payment by Tenant on account of such work. Landlord may, however, withhold
ten percent (10%) from each such payment and shall disburse such amount
after: (a) the work of repairing or rebuilding is completed and proof has
been furnished to Landlord that no lien or liability has attached or will
attach to such Leased Property or to Landlord in connection with such
repairing or rebuilding and (b) Tenant has obtained a certificate of use and
occupancy (or its functional equivalent) for the portion of such Leased
Property being repaired or rebuilt. Upon the completion of rebuilding or
repairing and the furnishing of such proof, the balance of the net proceeds
of such insurance payable to Tenant on account of such repairs or rebuilding
will be paid to Tenant. Tenant will obtain and deliver to Landlord a
temporary or final certificate of occupancy before such Leased Property is
reoccupied for any purpose. Tenant shall complete such repairs or rebuilding
free and clear of mechanic's or other liens, and in accordance with the
building codes and all applicable laws, ordinances, regulations, or orders of
any state, municipal, or other public authority affecting the repairs or
rebuilding, and also in accordance with all requirements of the insurance
rating organization, or similar body. Any remaining proceeds of insurance
after such restoration will be Tenant's property.
10.02 LANDLORD'S INSPECTION. During the progress of such repairs or
rebuilding, Landlord and its architects and engineers may, from time to time,
inspect the subject Leased Property and will be furnished, if required by
them, with copies of all plans, shop drawings, and specifications relating to
such repairs or rebuilding. Tenant will keep all plans, shop drawings, and
specifications available, and Landlord and its architects and engineers may
examine them at all reasonable times. If, during such repairs or rebuilding,
Landlord and its architects and engineers determine that the repairs or
rebuilding are not being done in accordance with the approved plans and
specifications,
35
Landlord will give prompt notice in writing to Tenant, specifying in detail
the particular deficiency, omission, or other respect in which Landlord
claims such repairs or rebuilding do not accord with the approved plans and
specifications. Upon the receipt of any such notice, Tenant will cause
corrections to be made to any deficiencies, omissions, or such other respect.
Tenant's obligations to supply insurance, according to Article IV, will be
applicable to any repairs or rebuilding under this Section 10.02.
10.03 LANDLORD'S COSTS. Tenant shall, within fifteen (15) days
after receipt of an invoice from Landlord, pay the reasonable costs,
expenses, and fees of any architect or engineer employed by Landlord to
review any plans and specifications and to supervise and approve any
construction, or for any services rendered by such architect or engineer to
Landlord as contemplated by any of the provisions of this Lease, or for any
services performed by Landlord's attorneys in connection therewith; provided,
however, that Landlord will consult with Tenant and notify Tenant of the
estimated amount of such expenses.
10.04 RENT ABATEMENT. Notwithstanding the occurrence of any event
that causes any interruption, disruption or interference of any kind (whether
or not substantial) of Tenant's Business on the Leased Property, Tenant shall
continue to pay to Landlord the full amount of the Base Annual Rent as
required by this Lease without abatement, reduction, interruption, or delay
of any kind.
10.05 SUBSTANTIAL DAMAGE DURING LEASE TERM. Provided Tenant has
fully complied with Section 4.01 hereof and has satisfied the conditions of
the last sentence of this Section 10.05, if, at any time during the Term or
any Extension Term, as the case may be, of this Lease, any Leased Property
is so damaged by fire or otherwise that it is Completely Destroyed or
Partially Destroyed (as such terms are hereafter defined), Tenant may, within
one hundred and eighty (180) days after such damage, give notice of its
election to terminate this Lease with respect to such Leased Property and,
subject to the further provisions of this Section, this Lease will cease with
respect to such Leased Property on the thirtieth (30th) day after the
delivery of such notice. If the Lease is so terminated, Tenant will have no
obligation to repair, rebuild or replace such Leased Property, and the entire
insurance proceeds will belong to Landlord. If the Lease is not so
terminated, Tenant shall rebuild such Leased Property in accordance with
Section 10.01. If Tenant elects to terminate this Lease pursuant to this
Section 10.05, Tenant will pay (or cause to be paid) to Landlord, an amount
equal to the excess amount, if any, of the book value of the damaged property
(excluding the land) as shown in Landlord's financial statements as of the
date of such termination, over the amount of all insurance proceeds received
by Landlord. A Leased Property shall be deemed to be "Completely Destroyed"
if there is sufficient damage to such Leased Property that Landlord and
Tenant agree to its classification as such. A Leased Property shall be
deemed to be "Partially Destroyed" if, as a result of damages to it, a
substantial part of the Business (as determined by a reasonable dealer in the
trade, in light of standard trade practices) cannot be conducted on it within
one hundred and eighty (180) days of the occurrence of such damages. In the
event that Landlord and Tenant are unable to agree to a determination of
whether any Leased Property is Completely Destroyed,
36
Partially Destroyed or otherwise, such determination shall be made pursuant
to the Arbitration provisions set forth in Article XIV.
10.06 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of
Sections 10.01 or 10.05 to the contrary, if damage to or destruction of any
Leased Property occurs during the last twenty-four (24) months of the Term or
any Extension Term, and if such damage or destruction renders the Leased
Property Completely Destroyed or Partially Destroyed, either party shall have
the right to terminate this Lease as to such Leased Property by giving notice
to the other within ten (10) days after the date of damage or destruction, in
which event Landlord shall be entitled to retain the insurance proceeds and
Tenant shall pay to Landlord on demand the amount of any deductible or
uninsured loss arising in connection therewith; provided, however, that any
such notice given by Landlord shall be void and of no force and effect if
Tenant exercises an available option for an Extension Term with respect to
such Leased Property pursuant to provisions of this Lease within ten (10)
business days following receipt of such termination notice.
10.07 RISK OF LOSS. Notwithstanding anything herein to the
contrary, during the Term or any Extension Term, as the case may be, the risk
of loss of or decrease in the enjoyment and beneficial use of the Leased
Properties in consequence of the damage or destruction thereof by fire, the
elements, casualties, thefts, riots, wars or otherwise is assumed by Tenant,
and Landlord shall in no event be answerable or accountable therefor except
in the case of gross negligence, willful misconduct or breach of this Lease
by Landlord resulting in such damage or destruction. In addition, all risk
of loss or decrease in enjoyment and beneficial use in consequence of
foreclosures, attachments, levies or executions is assumed by Tenant except
for foreclosure due to Landlord's indebtedness.
ARTICLE XI
CONDEMNATION
11.01 TOTAL TAKING. If at any time during the Term or any Extension
Term, as the case may be, any Leased Property is totally and permanently
taken by right of eminent domain or by conveyance made in response to the
threat of the exercise of such right ("Condemnation"), this Lease shall
terminate as to such Leased Property on the Date of Taking (which shall mean
the date the condemning authority has the right to possession of the property
being condemned), and Tenant shall promptly pay all outstanding applicable
Rent and other charges through the date of termination, provided, however,
this Lease shall not so terminate if the Condemnation occurred due to the
failure of Tenant to maintain such Leased Property as required by Article VII
hereof or other applicable provisions hereof, whether or not such failure on
the part of Tenant constituted an Event of Default hereunder at the time of
the Condemnation.
11.02 PARTIAL TAKING. If a portion of a Leased Property is taken by
Condemnation, this Lease shall remain in effect as to such Leased Property if
such Leased Property is not thereby rendered Unsuitable for the continuation of
Tenant's Business on that Leased Property (which shall
37
mean that such Leased Property is in such a state or condition such that in
the good faith judgment of Tenant, reasonably exercised, it cannot be used on
a commercially practicable basis in the operation of the Business), but if
such Leased Property is thereby rendered Unsuitable for the continuation of
Tenant's Business on that Leased Property, this Lease shall terminate as to
such Leased Property on the Date of Taking, provided such Condemnation was
not as a result of Tenant's failure to maintain such Leased Property as
provided for in Section 11.01.
11.03 RESTORATION. If there is a partial taking of any Leased Property
and this Lease remains in full force and effect pursuant to Section 11.02,
Landlord shall retain the amount of any Landlord Award (as hereafter defined)
received by Landlord, Landlord shall apply such Landlord Award to accomplish all
necessary restoration to the Leased Property, and any excess after such
application shall be retained by Landlord. If there is a partial taking of any
Leased Property and this Lease remains in full force and effect pursuant to
Section 11.02, Tenant shall retain the amount of any Tenant Award (as hereafter
defined) received by Tenant, Tenant shall apply such Tenant Award to accomplish
all necessary restoration of Tenant's property, and any excess after such
application shall be retained by Tenant. Notwithstanding anything in this
Section to the contrary, in the event that there is a partial taking of any
Leased Property and this Lease remains in full force and effect pursuant to
Section 11.02, and there is a single Award with respect to such partial taking,
then the Landlord and Tenant shall use their good faith efforts to determine the
proper apportionment of such Award (as hereafter defined) to restoration of
Landlord's and Tenant's respective properties. In the event that the parties
are unable to agree on such apportionment within thirty (30) days, the parties
shall submit to arbitration of an apportionment subject to the arbitration
provisions set forth in Article XIV.
11.04 LANDLORD'S INSPECTION. During the progress of such restoration,
Landlord and its architects and engineers may, from time to time, inspect the
subject Leased Property and will be furnished, if required by them, with copies
of all plans, shop drawings, and specifications relating to such restoration.
Tenant will keep all plans, shop drawings, and specifications available, and
Landlord and its architects and engineers may examine them at all reasonable
times. If, during such restoration, Landlord and its architects and engineers
determine that the restoration is not being done in accordance with the approved
plans and specifications, Landlord will give prompt notice in writing to Tenant,
specifying in detail the particular deficiency, omission, or other respect in
which Landlord claims such restoration does not accord with the approved plans
and specifications. Upon the receipt of any such notice, Tenant will cause
corrections to be made to any deficiencies, omissions, or such other respect.
Tenant's obligations to supply insurance, according to Article IV, will be
applicable to any restoration under this Section.
11.05 AWARD DISTRIBUTION. The entire compensation, sums or anything of
value awarded, paid or received on a total or partial Condemnation of a Leased
Property that is awarded to Landlord shall belong to Landlord (the "Landlord
Award"). The entire compensation, sums or anything of value awarded, paid or
received on a total or partial Condemnation of a Leased Property that is awarded
to Tenant shall belong to Tenant (the "Tenant Award", collectively with the
Landlord Award, the "Awards", and each, individually, an "Award").
Notwithstanding anything in this
38
Section to the contrary, in the event that there is a total or partial
Condemnation of a Leased Property and there is a single Award with respect to
such Condemnation, then the Landlord and Tenant shall use their good faith
efforts to determine the proper apportionment of such Award to Landlord's and
Tenant's respective properties. In the event that the parties are unable to
agree on such apportionment within thirty (30) days, the parties shall submit
to arbitration of an apportionment subject to the arbitration provisions set
forth in Article XIV.
11.06 TEMPORARY TAKING. The taking of any Leased Property, or any
part thereof, by military or other public authority shall constitute a taking
by Condemnation only when the use and occupancy by the taking authority has
continued for longer than twenty four (24) months. During any such
twenty-four (24) month period, which shall be a temporary taking, all the
provisions of this Lease shall remain in full force and effect as to such
Leased Property with no abatement of rent payable by Tenant hereunder. In
the event of any such temporary taking, the entire amount of any such Award
made for such temporary taking allocable to the Term hereof, whether paid by
way of damages, Rent or otherwise, shall be paid to Tenant.
ARTICLE XII
ADDITIONAL REPRESENTATIONS, WARRANTIES AND FINANCIAL COVENANTS
Tenant hereby represents, warrants and covenants to Landlord as follows:
12.01 ORGANIZATION AND QUALIFICATION.
(a) Tenant is a Texas corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation or
organization, with all power and authority, corporate or otherwise,
necessary to: (i) enter into and perform this Lease and (ii) own and
lease its assets and properties, and conduct its Business, as it is
now being conducted or proposed to be conducted. Tenant is duly
qualified as a foreign corporation or other entity, as the case may
be, to conduct its Business and own and lease its assets and
properties, and is in good standing, in each jurisdiction where the
character of its assets and properties owned or held under lease or
the nature of its Business makes such qualification necessary or
advisable, and is duly qualified and licensed under all laws,
regulations, ordinances or orders of public or governmental
authorities, or otherwise to carry on its Business and own or lease
its assets and properties in the places and in the manner in which
they are owned, leased or conducted or proposed to be owned, leased or
conducted, except where the failure to be so organized, qualified and
in good standing or to have such authority, qualification or licensing
could not result in a Material Adverse Change. Complete and correct
copies of Tenant's Charter, as in effect on the date hereof, and
Tenant's by-laws, also as in effect on the date hereof, have been
delivered to Landlord.
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(b) Each Affiliate that conducts operations or business on or from any
Leased Property, whether now or at any time in the future, is duly
organized, validly existing and in good standing under the laws of its
organization, with all power and authority, corporate or otherwise,
necessary to own and lease its assets and properties, and conduct its
business, as it is now being conducted or proposed to be conducted.
Each Affiliate is duly qualified as a foreign corporation or other
entity, as the case may be, to do business and own and lease its
assets and properties, and is in good standing, in each jurisdiction
where the character of its assets and properties owned or held under
lease or the nature of its activities or business makes such
qualification necessary or advisable, and is duly qualified and
licensed under all laws, regulations, ordinances or orders or public
or governmental authorities or otherwise to carry on its business and
own or lease its assets and properties in the places and in the manner
in which they are owned, leased or is conducted or proposed to be
owned, leased or conducted, except where the failure to be so
organized, qualified and in good standing or to have such authority,
qualification or licensing could not result in a Material Adverse
Change.
"Material Adverse Change" since a particular specified date, or a date
which may be specified from the circumstances existing immediately prior to
the happening of a specified event or occurrence, or, if no date or event is
specified, with reference to the most recent Annual Financial Statements
delivered pursuant to this Lease, means a material adverse change in the
Business, assets, properties, franchises, financial condition or income of
Tenant or the operations, business, assets, properties, franchises,
financial condition, income or prospects of any Affiliate, whether or not
such event or occurrence is an Event of Default.
"Affiliate" means with respect to any Person, (i) any Person that holds
direct or indirect beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of voting securities or other
voting interests representing at least five percent (5%) of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least five percent (5%) of the outstanding equity securities
or interests in a Person, or (ii) any Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is
under common control with such Person.
A "Person" shall mean and include natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts,
business trusts, Indian tribes or other organizations, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
12.02 MATERIAL AGREEMENTS. SCHEDULE 12.02 is a complete list of all
agreements to which Tenant is a party that are material to the ownership and use
of the Leased Property or the
40
operation of Tenant's Business, and Tenant has delivered to Landlord a copy
of each of these agreements (including all exhibits, schedules and amendments
thereto).
12.03 CHANGES IN CONDITION. Since the date of the latest Annual
Financial Statements, no Material Adverse Change has occurred between such
date and the date hereof, and neither Tenant nor any Affiliate has entered
into any material transaction outside the ordinary course of its or their
operations or business, including the Business, except as set forth in
SCHEDULE 12.03 and the matters contemplated by this Lease.
12.04 FRANCHISES, LICENSES, ETC. Tenant and its subsidiaries own,
or have sufficient interests in, all franchises, trademarks, trademark
rights, trade names, trade name rights, copyrights, licenses, permits,
authorizations and other rights as are necessary for the conduct of Tenant's
Business and its subsidiaries' businesses as now conducted or proposed to be
conducted by Tenant or any Affiliate, as well as rights under any agreement
under which Tenant or its subsidiaries has access to confidential information
used by Tenant or its subsidiaries in Tenants' Business or the businesses of
its subsidiaries, as the case may be (collectively, the "Intellectual
Property"). All Intellectual Property is in full force and effect in all
material respects, and Tenant and its subsidiaries are in substantial
compliance with the foregoing without any conflict with the valid rights of
others, which has resulted, or could be reasonably likely to result in any
Material Adverse Change. Neither Tenant nor any Affiliate has violated, or
received any communication that by conducting its Business or any Affiliate's
businesses, it or any Affiliate would violate any franchises, licenses,
patents, trademarks, service marks, trade names, copyrights, trade secrets,
proprietary rights or processes of any other Person (as hereafter defined)
nor is Tenant or any Affiliate aware of any such violations. No event has
occurred which permits, or after notice or lapse of time or both would
permit, the revocation or termination of any such license, franchise or other
right or affect the rights of Tenant or any Affiliate so as to result in or
reasonably be likely to result in any Material Adverse Change. There is no
litigation or other proceeding or dispute or, to the knowledge of Tenant or
any Affiliate, threat thereof with respect to the validity or, where
applicable, the extension or renewal, of any of the foregoing which has
resulted, or could result, in any Material Adverse Change.
12.05 LITIGATION. No litigation, at law or in equity, or any
proceeding before any court, board or other governmental or administrative
agency or any arbitrator or other forum of alternative dispute resolution is
pending or, to the knowledge of Tenant or any Affiliate, threatened which
involves any risk of any final judgment, order or liability which, after
giving effect to any applicable insurance, has resulted, or could result, in
any Material Adverse Change or which seeks to enjoin the execution and
consummation of this Lease and the performance of Tenant's obligations
hereunder. No judgment, decree or order of any court, board or other
governmental or administrative agency or any arbitrator has been issued
against or binds Tenant or any Affiliate, which has resulted, or could
result, in any Material Adverse Change.
12.06 AUTHORIZATION AND ENFORCEABILITY. Tenant has taken all corporate
or other action required to execute, deliver and perform this Lease. This
Lease constitutes the legal, valid and binding obligation of Tenant and is
enforceable against Tenant in accordance with its terms.
41
12.07 NO LEGAL OBSTACLE TO LEASE. Neither the execution and delivery of
this Lease nor the performance of any obligation hereunder has constituted or
resulted in or will constitute or result in:
(a) any breach, violation of, conflict with, default under or
termination of any agreement, contract, mortgage, instrument,
deed or lease to which Tenant or any Affiliate is a party or by
which it or they are bound;
(b) the violation of or conflict with any law, statute, ordinance,
judgment, decree, order, rule or regulation applicable to Tenant,
any Affiliate, any Improvements or any Leased Property; or
(c) any violation of or conflict with Tenant's or any Affiliate's
Charter or By-Laws or other organizational documents, as the case
may be.
No approval, authorization or other action by, or declaration to or
filing with, any governmental or administrative authority or any other Person
is required to be obtained or made by Tenant in connection with the
execution, delivery and performance of this Lease.
12.08 CERTAIN BUSINESS REPRESENTATIONS:
(a) LABOR RELATIONS. No dispute or controversy between Tenant or any
Affiliate and its or their employees has resulted in, or is
reasonably likely to result in, any Material Adverse Change, and
neither Tenant nor any Affiliate anticipates that its
relationships with its unions or employees will result, or are
reasonably likely to result, in any Material Adverse Change.
Tenant and each Affiliate is in compliance in all material
respects with all federal and state laws relating to employees
and labor relations, including, but not limited to, laws relating
to health and safety in the workplace, non-discrimination in
employment and the payment of wages.
(b) ANTITRUST. Tenant and each Affiliate is in compliance in all
material respects with all federal and state antitrust laws
relating to Tenant's Business and the subsidiaries' businesses
and the geographic concentration thereof.
(c) CONSUMER PROTECTION. Neither Tenant nor any Affiliate is in
violation of any rule, regulation, order, or interpretation of
any rule, regulation or order of the Federal Trade Commission
(including truth-in-lending) or other federal, state or local
public or governmental
42
authority or agency, with which the failure to comply, in the
aggregate, has resulted in, could result in, a Material Adverse
Change.
(d) FUTURE EXPENDITURES. Neither Tenant nor any Affiliate,
anticipates that further expenditures, if any, by Tenant or any
Affiliate needed to meet the provisions of any federal, state or
foreign governmental statutes, orders, rules or regulation could
result in any Material Adverse Change.
(e) BENEFIT LIABILITIES. Neither Tenant nor any ERISA Affiliate
maintains, contributes to, or is obligated to
contribute to, nor has Tenant or any ERISA Affiliate
maintained, contributed to, been obligated to
contribute to, or had any direct, indirect, or
contingent liability with respect to, any Title IV Plan
(as hereafter defined). Each Tenant Benefit Plan has
been maintained in compliance with its terms and with
applicable laws (including specifically the Code and
the Employee Retirement Income Security Act of 1974
("ERISA"). "Tenant Benefit Plan" means any plan, fund,
or other similar program described in Section 3(2) of
ERISA and established or maintained or with respect to
which Tenant and/or any ERISA Affiliate has an
obligation to contribute for the benefit of its
employees (or for which Tenant could be directly or
contingently liable). "Title IV Plan" means an
"employee benefit plan" (as defined in Section 3(3) of
ERISA) that is subject to Title IV of ERISA and is or
has been established or maintained, by Tenant or any
ERISA Affiliate, or to which contributions are, have
been, or should have been made. "ERISA Affiliate"
means any trade or business, whether or not
incorporated, that, together with Tenant, is or has
been under common control, within the meaning of
Section 414(b), (c), (m), or (o) of the Code or Section
4001 of ERISA.
12.09 CERTAIN FINANCIAL COVENANTS. Tenant or an Affiliate,
as applicable, is in compliance in all material respects with all financial
covenants required to be maintained pursuant to any franchise or other agreement
pursuant to which Tenant or such Affiliate operates its business, except in such
respects as shall not result in any franchisor under any franchise or operating
agreement to which Tenant is a party taking any action that could result in a
Material Adverse Change.
12.10 CASH FLOW COVERAGE RATIO COVENANT. On the date of this
Lease and measured at a date that is twenty-four (24) months following such date
(each a "Cash Flow Measurement Date"), and on each anniversary date that is
twenty-four (24) months following a prior Cash Flow Measurement Date, Tenant
shall have maintained a Cash Flow Coverage Ratio of not less than 1.5 to 1.0
based on the Annual Financial Statements to be delivered to Landlord in
accordance
43
with Section 6.04 hereof. "Cash Flow Coverage Ratio" means the aggregate of
net income before taxes plus mortgage interest, rent expense, depreciation,
compensation of principals of the Business, management fees plus the annual
LIFO adjustment and other non-cash expenses, less recurring capital
expenditures and gain (loss) on sale of real estate, dividends and/or profits
taken out of Tenant divided by the aggregate of the Tenant's obligations
under this Lease. Notwithstanding anything herein to the contrary, in the
event that Tenant shall not be in compliance with this covenant at a Cash
Flow Measurement Date or Tenant shall have knowledge of such non-compliance
prior to any Cash Flow Measurement Date, the Tenant shall have the right to
cure such breach through any reasonable commercial means, including, but not
limited to, providing guarantees acceptable to Landlord, increasing capital,
or cross collateralizing with any other property of Tenant or an Affiliate,
provided that such breach is cured within one hundred and eighty (180) days
after Notice by Landlord to Tenant of the existence of such breach.
12.11 DISCLOSURE. This Lease does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make any statement contained herein not misleading in light of the
circumstances under which it was made. To Tenant's knowledge, there is no
event, fact or occurrence that has resulted, or in the future (so far as Tenant
can reasonably foresee) could result, in any Material Adverse Change, except to
the extent that present or future general and sector-specific economic
conditions may result in a Material Adverse Change.
12.12 COVENANT NOT TO ACQUIRE. Tenant covenants and agrees
that during the Term and any Extension Term, as the case may be, Tenant and its
controlling shareholders or its or their Affiliates will not acquire, directly
or indirectly, more that 9.90% of the outstanding common shares of beneficial
interest of Capital Automotive REIT. Tenant covenants and agrees that it will
divest itself of such shares of Capital Automotive REIT as may be necessary to
satisfy the limitations of this Section 12.12.
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ARTICLE XIII
ASSIGNMENT AND SUBLETTING; ATTORNMENT
13.01 PROHIBITION AGAINST SUBLETTING AND ASSIGNMENT.
Subject to Section 13.03, Tenant shall not, without the prior written consent
of Landlord, or upon compliance with any conditions established by Landlord,
in its sole discretion, assign, mortgage, pledge, hypothecate, encumber or
otherwise transfer (except to an Affiliate) this Lease or any interest
herein, or all or any part of any Leased Property, or suffer or permit this
Lease or the leasehold estate created hereby or any other rights arising
hereunder to be assigned, transferred, mortgaged, pledged, hypothecated or
encumbered, in whole or in part, whether voluntarily, involuntarily or by
operation of law. For purposes of this Section 13.01, an assignment of this
Lease shall be deemed to include any Change of Control of Tenant, as if such
Change of Control were an assignment of the Lease. In the event that (i)
Landlord shall withhold any consent to any assignment or transfer of this
Lease or any interest herein, and (ii) such assignee or transferee is
approved by the relevant manufacturer for continuation as a franchisee, there
shall be a presumption that such assignment or transfer was reasonable and
Landlord shall have the burden of rebutting such presumption and of proving
that such consent was in fact reasonably withheld (or that such conditions
were reasonable). Upon the assignment of this Lease according to this
Section 13.01, Plains Chevrolet, Inc. shall have no liability under this
Lease for any obligations or responsbilities of Tenant that accrue after the
date the assignment becomes effective.
13.02 CHANGES OF CONTROL. A Change of Control requiring the
consent of Landlord shall mean:
(a) the issuance and/or sale by Tenant or the sale by any
shareholder or equity holder of Tenant of a Controlling
(which shall mean, as applied to any Person, the
possession, directly or indirectly, of the power to
direct or cause the direction of the management and
policies of such Person, whether through the ownership
of voting securities, by contract or otherwise)
interest in Tenant to a Person other than an Affiliate
of Tenant, other than in either case a distribution to
the public pursuant to an effective registration
statement under the Securities Act of 1933, as amended
(a "Registered Offering");
(b) the sale, conveyance or other transfer of all or
substantially all of the assets of Tenant (whether by
operation of law or otherwise) provided, however, that
no Change of Control shall be deemed to have occurred
in the event of the transfer of assets as a result of
the death of a person involved in the Business, so long
as the transferee is approved by the manufacturer for
the continuation of the Business; or
(c) any transaction pursuant to which Tenant is merged with
or consolidated into another entity (other than an
entity owned and Controlled by an Affiliate), and
Tenant is not the surviving entity.
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13.03 OPERATING/SERVICE AGREEMENTS.
(a) PERMITTED AGREEMENTS. Tenant shall, without Landlord's
prior approval, be permitted to enter into such
operating/service agreements for portions of each
Leased Property to various licensees in connection with
Tenant's Business as are customarily associated with or
incidental to the operation of such Leased Property,
which agreements may be in the nature of a sublease
agreement.
(b) TERMS OF AGREEMENTS. Each operating/service agreement
concerning a Leased Property shall be subject and
subordinate to the provisions hereof. No agreement
made as permitted by Section 13.03(a) shall affect or
reduce any of the obligations of Tenant hereunder, and
all such obligations shall continue in full force and
effect as if no agreement had been made. No agreement
shall impose any additional obligations on Landlord
hereunder.
(c) COPIES. Tenant shall, within ten (10) days after the
execution and delivery of any operating/service
agreement permitted by Section 13.03(a), deliver a
duplicate original thereof to Landlord.
(d) ASSIGNMENT OF RIGHTS IN AGREEMENTS. As security for
performance of its obligations hereunder, Tenant hereby
grants, conveys and assigns to Landlord all right,
title and interest of Tenant in and to all
operating/service agreements now in existence or
hereinafter entered into for each Leased Property, and
all extensions, modifications and renewals thereof and
all rents, issues and profits therefrom, to the extent
the same are assignable by Tenant. Landlord hereby
grants to Tenant a license to collect and enjoy all
rents and other sums of money payable under any such
agreement; provided, however, that Landlord shall have
the absolute right at any time after the occurrence and
continuance of an Event of Default upon notice to
Tenant and any vendors or licensees to revoke said
license and to collect such rents and sums of money and
to retain the same. Tenant shall not (i) after the
occurrence and continuance of an Event of Default,
consent to, cause, or allow, any material modification
or alteration of any of the terms, conditions or
covenants of any of the agreements or the termination
thereof, without the prior written approval of Landlord
nor (ii) accept any rents (other than customary
security deposits) more than thirty (30) days in
advance of the accrual thereof nor permit anything to
be done, the doing of which, nor omit or refrain from
doing anything, the omission of which, will or could be
a breach of or default in the terms of any of the
agreements.
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(e) LICENSES, ETC. For purposes of Section 13.03, the
operating/service agreements shall mean any licenses,
concession arrangements, or other arrangements relating
to the possession or use of all or any part of any
Leased Property.
13.04 ASSIGNMENT. If Landlord shall withhold its consent to
any assignment or if Landlord shall have established conditions to approval
of any assignment but such conditions shall not have been complied with, to
the satisfaction of Landlord, such assignment shall not in any way impair
the continuing primary liability of Tenant hereunder. No consent to any
assignment in a particular instance shall be deemed to be a general waiver of
the prohibition set forth in Article XIII. Any assignment shall be solely of
Tenant's entire interest in this Lease with respect to the subject Leased
Property or Leased Properties. Any assignment or other transfer of all or
any portion of Tenant's interest in this Lease in contravention of Article
XIII shall be voidable at Landlord's option.
13.05 REIT LIMITATIONS.
(a) Anything contained herein to the contrary
notwithstanding, Tenant shall not: (a) sublet or
assign a Leased Property or this Lease on any basis
such that the rental or other amounts to be paid by the
sublessee or assignee thereunder would be based, in
whole or in part, on the income or profits derived by
the business activities of the sublessee or assignee;
(b) sublet or assign a Leased Property or this Lease to
any Person that, under Section 856(d)(2)(B) of the
Internal Revenue Code of 1986, as amended (the "Code"),
Landlord or its general partner owns, directly or
indirectly (by applying constructive ownership rules
set forth in Section 856(d) (5) of the Code, a ten
percent (10%) or greater interest; or (c) sublet or
assign a Leased Property or this Lease in any other
manner or otherwise derive any income which could cause
any portion of the amounts received by Landlord
pursuant hereto or any sublease to fail to qualify as
"rents from real property" within the meaning of
Section 856(d) of the Code, or which could cause any
other income received by Landlord to fail to qualify as
income described in Section 856(c) (2) of the Code.
The requirements of this Section 13.05 shall likewise
apply to any further subleasing by any subtenant.
(b) Tenant acknowledges that Capital Automotive REIT, a
Maryland real estate investment trust and the general
partner of Landlord (the "Company"), intends to elect
to be taxed as a real estate investment trust (a
"REIT") under the Code. Tenant shall not do anything
which would adversely affect the Company's status as a
REIT. Tenant hereby agrees to modifications of this
Lease which do not materially adversely affect Tenant's
rights and liabilities if such
47
modifications are required to retain or clarify the
Company's status as a REIT.
13.06 ATTORNMENT. Tenant shall insert in each sublease
permitted under Section 13.03(a) provisions to the effect that: (a) such
sublease is subject and subordinate to all of the terms and provisions of
this Lease and to the rights of Landlord hereunder; (b) in the event this
Lease shall terminate before the expiration of such sublease, the sublessee
thereunder will, at Landlords' option, attorn to Landlord and waive any right
the sublessee may have to terminate the sublease or to surrender possession
thereunder, as a result of the termination hereof; and (c) in the event the
sublessee receives a written notice from Landlord or Landlord's assignees, if
any, stating that Tenant is in default under this Lease, the sublessee shall
thereafter be obligated to pay all rentals accruing under said sublease
directly to the party giving such notice, or as such party may direct. All
rentals received from the sublessee by Landlord or Landlord's assignees in
respect of a Leased Property, if any, as the case may be, shall be credit
against the amounts owing by Tenant hereunder with respect to such Leased
Property.
13.07 SEVERANCE AND SPIN-OFF. If at any time while this
Lease is in effect any Leased Property shall be utilized by Tenant in the
operation of more than one automobile franchise, then provided that there is no
existing Event of Default and there exists no condition which, with the passage
of time, could become an Event of Default, Tenant shall have the right (the
"Spin-Off Right") to sever and spin-off one or more parcels (each referred to as
a "Spin-Off Parcel") of the Leased Property from this Lease, subject to
compliance with the requirements of Section 13.08.
13.08 ASSIGNMENT. If the Leased Property is not a separate
subdivided lot, Landlord may condition its approval of an assignment upon
Tenant showing that there are appropriate provisions (such as a condominium
regime, subdivision, and/or reciprocal easements, lender and/or franchisor
consents if necessary, and separate tax lots) which allow the Leased Property
to be separately owned and operated without interference from or dependence
upon, another person as to items such as access, real estate taxes, or
utilities.
ARTICLE XIV
ARBITRATION
14.01 CONTROVERSIES. Except with respect to the payment of
Rent hereunder, which shall be subject to the provisions of Section 9.02, in
the event a controversy arises between the parties as to any of the
requirements of this Lease or the performance hereunder, which the parties
are unable to resolve, the parties agree to waive the remedy of litigation
(except for extraordinary relief in an emergency situation) and agree that
such controversy or controversies shall be determined by arbitration as
hereafter provided in this Article.
14.02 APPOINTMENT OF ARBITRATORS. The party or parties
requesting arbitration shall serve upon the other a demand therefor, in
writing, specifying in detail the controversy and matter(s)
48
to be submitted to arbitration before the American Arbitration Association.
The selection of arbitrators shall be conducted pursuant to the rules for
resolution of commercial disputes promulgated by the American Arbitration
Association. The party or parties giving notice shall request a listing of
available arbitrators from the American Arbitration Association, and each
party shall respond in the selection process within fifteen (15) days after
each receipt of such listings until a panel of three (3) arbitrators has been
designated. If either party fails to respond within fifteen (15) days, it is
agreed that the American Arbitration Association may make such selections as
are necessary to complete the panel of three (3) arbitrators.
14.03 ARBITRATION PROCEDURE. Within five (5) business days
after the selection of the arbitration panel, the arbitrators shall give written
notice to each party as to the time and the place of each meeting, which shall
be held in the jurisdiction in which the Leased Property is situated, at which
the parties may appear and be heard, which shall be no later than fifteen (15)
days after certification of the arbitration panel. The parties specifically
waive discovery, and further waive the applicability of rules of evidence or
rules of procedure in the proceedings. The applicable rules shall be those in
effect at the time for the resolution of commercial disputes promulgated by the
American Arbitration Association. The arbitrators shall take such testimony and
make such examination and investigations as the arbitrators reasonably deem
necessary. The decision of the arbitrators shall be in writing signed by a
majority of the panel which decision shall be final and binding upon the parties
to the controversy. Provided, however, in rendering their decisions and making
awards, the arbitrators shall not add to, subtract from or otherwise modify the
provisions of this Lease.
14.04 EXPENSES. The expenses of the arbitration shall be
assessed by the arbitrators and specified in the written decision. In the
absence of a determination or assessment of expenses of the arbitration
procedure in the award, all of the expenses of such arbitration shall be
divided equally between Landlord and Tenant. Each party in interest shall be
responsible for and pay the fees, costs and expenses of its own counsel,
unless the arbitration award provides for an assessment of reasonable
attorneys' fees and costs.
14.05 ENFORCEMENT OF THE ARBITRATION AWARD. There shall be no
appeal from the decision of the arbitrators, and upon the rendering of an
award, any party thereto may file the arbitrators' decision in the United
States District Court for the jurisdiction in which the Leased Property is
situated for enforcement as provided by applicable law.
ARTICLE XV
QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT, ESTOPPEL CERTIFICATES
15.01 QUIET ENJOYMENT. So long as Tenant performs all of its
obligations under this Lease, Tenant's possession of the Leased Properties
will not be disturbed by or through Landlord.
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15.02 LANDLORD MORTGAGES; SUBORDINATION. Subject to Section
15.03, without the consent of Tenant, Landlord may, from time to time,
directly or indirectly, create or otherwise cause to exist any liens,
encumbrances, security interests or title retention agreements on any Leased
Property, or any portion thereof or any interest therein, whether to secure
any borrowing or other means of financing or refinancing. Tenant shall
execute, acknowledge and deliver to Landlord, at any time and from time to
time (up to three times per calendar year) upon demand by Landlord or any
mortgagee or any holder of any mortgage or other instrument described in this
Section, without cost to Landlord, a Subordination and Non-Disturbance
Agreement in substantially the form attached hereto as EXHIBIT 15.02, which
provides that (i) Tenant's rights hereunder are subordinate to any ground
lease or underlying lease, first mortgage, first deed of trust, or other
first lien against any Leased Property, together with any renewal,
consolidation, extension, modification, or replacement thereof, which now or
at any subsequent time affects any Leased Property or any interest of
Landlord in any Leased Property, except to the extent that any such
instrument expressly provides that this Lease is superior; and (ii) in the
event such party succeeds to Landlord's interest under the Lease and provided
that no Event of Default by Tenant exists, such party will not disturb
Tenant's possession, use or occupancy of the subject Leased Property or
Tenant's rights under this Lease. If Tenant fails or refuses to execute,
acknowledge, and deliver such Subordination and Non-Disturbance Agreement
within ten (10) business days after written demand, then Landlord shall send
to Tenant a second written demand. If Tenant fails or refuses to execute,
acknowledge and deliver such Subordination and Non-Disturbance Agreement
within ten (10) days after such second written demand, then Landlord or such
successor in interest may execute, acknowledge and deliver such Subordination
and Non-Disturbance Agreement on behalf of Tenant as Tenant's
attorney-in-fact. Tenant hereby constitutes and irrevocably appoints
Landlord, its successors and assigns, as Tenant's attorney-in-fact to
execute, acknowledge, and deliver on behalf of Tenant the Subordination and
Non-Disturbance Agreement. This power of attorney is coupled with an
interest and is irrevocable.
15.03 ATTORNMENT. If any holder of any mortgage, indenture,
deed of trust, or other similar instrument described in Section 15.02
succeeds to Landlord's interest in any Leased Property, Tenant will pay to
such holder all Rent subsequently payable hereunder as to such Leased
Property. Tenant shall, upon request of anyone succeeding to the interest of
Landlord, automatically become the tenant of, and attorn to, such successor
in interest without changing this Lease. The successor in interest will not
be bound by: (a) any payment of Rent for more than one (1) month in advance;
(b) any amendment or modification hereof made without its written consent;
(c) any claim against Landlord arising prior to the date on which the
successor succeeded to Landlord's interest; or (d) any claim or offset of
Rent against Landlord.
15.04 ESTOPPEL CERTIFICATES. At the request of Landlord or any
mortgagee or purchaser of a Leased Property, Tenant shall execute,
acknowledge, and deliver an estoppel certificate substantially in the form
attached hereto as EXHIBIT 15.04, in recordable form, in favor of Landlord or
any mortgagee or purchaser of any Leased Property certifying the following as
to such Leased Property: (a) that this Lease is unmodified and in full force
and effect, or if there have been modifications that the same is in full
force and effect as modified and stating the modifications; (b) the date to
which Rent and other charges have been paid; (c) that neither Tenant nor
Landlord is in
50
default nor is there any fact or condition which, with notice or lapse of
time, or both, would constitute a default, if that be the case, or specifying
any existing default; (d) that Tenant has accepted and occupies such Leased
Property; (e) that Tenant has no defenses, set-offs, deductions, credits, or
counterclaims against Landlord, if that be the case, or specifying such that
exist; (f) that Landlord has no outstanding construction or repair
obligations; and (g) such other information as may reasonably be requested by
Landlord or any mortgagee or purchaser. Any purchaser or mortgagee may rely
on this estoppel certificate. If Tenant fails to deliver the estoppel
certificates to Landlord within ten (10) business days after the request of
Landlord, then Landlord shall request such delivery a second time. If Tenant
fails to deliver the estoppel certificates to Landlord within ten (10) days
after such second request by Landlord, then Tenant shall be deemed to have
certified that: (a) this Lease is in full force and effect and has not been
modified, or that this Lease has been modified as set forth in the
certificate delivered to Tenant; (b) Tenant has not prepaid any Rent or other
charges except for the current month; (c) Tenant has accepted and occupies
such Leased Property; (d) neither Tenant nor Landlord is in default nor is
there any fact or condition which, with notice or lapse of time, or both,
would constitute a default; (e) Landlord has no outstanding construction or
repair obligation; and (f) Tenant has no defenses, set-offs, deductions,
credits, or counterclaims against Landlord. Tenant hereby irrevocably
appoints Landlord as Tenant's attorney-in-fact to execute, acknowledge and
deliver on Tenant's behalf any estoppel certificate which Tenant does not
object to within twenty (20) days after Landlord sends the certificate to
Tenant. This power of attorney is coupled with an interest and is
irrevocable.
15.05 WAIVER OF LANDLORD'S LIEN. Landlord agrees to and
does hereby waive its Landlord's lien and any other rights that it may have
with respect to property or assets representing the security or collateral
under Tenant's "floor-plan" or similar financing arrangements, during the
Term or any Extension Term. Landlord shall, upon request by any such lender,
execute such reasonable documents as are requested by Tenant's lender to
acknowledge such waiver and allow the lender access to the Leased Property.
ARTICLE XVI
RIGHT OF FIRST OFFER
16.01 RIGHT OF FIRST OFFER DURING LEASE TERM OR EXTENSION
TERM.
(a) If and when during the Term or Extension Term, as the
case may be, Landlord shall decide to sell the Leased
Properties to a Person who is not an Affiliate of
Landlord (the "Decision to Sell"), provided that no
Event of Default has occurred and is continuing under
the Lease, Landlord shall notify Tenant in writing
within ten (10) business days after Landlord makes a
Decision to Sell. Tenant shall have ten (10) business
days thereafter in which to notify Landlord in writing
of its desire to purchase the Leased Properties. If
Tenant shall give such notice, Tenant shall have a
period of thirty (30) days within which to
51
make a written offer to purchase the property (the
"First Offer"). The First Offer must set forth the
purchase price, deposit amounts and closing date and
any and all other terms and conditions being proposed
by Tenant.
(b) Within thirty (30) days of receipt of the First Offer,
Landlord shall give Tenant written notice of its
acceptance or rejection thereof. If accepted, Tenant
shall, within five (5) days after receipt of the
acceptance notice, make the deposit called for in the
First Offer and the parties shall proceed to contract
and closing upon the terms thereof. If the First Offer
is rejected, then, subject to the provisions of
subsections (c) and (d) of this Section 16.01, Tenant
shall have no further rights with respect to the
purchase of the Leased Properties during the Term or
Extension Term, as the case may be.
(c) If Landlord shall reject the First Offer, for a one
year period thereafter it may proceed to sell the
Leased Properties, subject to the Lease and the
remaining Term or Extension Term thereof, as the case
may be, to any third party, provided (i) the purchase
price of such sale shall exceed that specified in the
First Offer, or (ii) if the purchase price of such sale
does not exceed that specified in the First Offer, the
terms of such sale, taken together, are more favorable
to Landlord, in Landlord's reasonable judgement, than
those of the First Offer. There shall be a presumption
that Landlord's judgment was reasonable and Tenant
shall have the burden of rebutting such presumption and
of proving that such judgment was in fact
unreasonable.
(d) If no sale is effected by Landlord within the period
specified in subsection (c) above, then if Landlord
thereafter desires to sell the Leased Properties, the
procedure set forth in subsections (a), (b) and (c)
shall be followed.
(e) This option shall terminate in any event twenty (20)
years after the death of the last descendant of Xxxxxxx
Xxxxxxxxx Xxxxxxx, current President of the United
States, living at the time of execution of this Lease.
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16.02 RIGHT TO PURCHASE AT END OF AN EXTENSION TERM.
(a) Landlord hereby grants the Tenant the right and option
to purchase the Leased Properties (the "Option to
Purchase") at an amount equal to the Property
Consideration (as hereafter defined) upon termination
of an Extension Term of this Lease. The Option to
Purchase shall not be granted if Tenant does not extend
the Term of this Lease pursuant to Section 1.03 or if
on the Option Exercise Date (as hereafter defined) an
Event of Default with respect to any Leased Property
exists and has not been cured. The Tenant shall notify
Landlord in writing of its intent to exercise this
Option to Purchase, thirty (30) days prior to the end
of an Extension Term of this Lease (the "Option
Exercise Date").
(b) The consideration to be paid for the Leased Properties
upon exercise of the Option to Purchase (the "Property
Consideration") shall be the Appraised Value (as
hereafter defined) determined by (1) an independent
appraiser, who is a member of the Appraisal Institute,
and will be selected by Landlord, (the "Landlord MAI
Appraiser"), (2) a second appraiser, who is a member of
the Appraisal Institute, and will be selected by the
Tenant (the "Tenant MAI Appraiser"), and (3) a third
MAI Appraiser selected by agreement of the Landlord MAI
Appraiser and the Tenant MAI Appraiser (the "Third MAI
Appraiser") (each an "Appraiser" and, collectively, the
"Appraisers"). Landlord and Tenant shall, as promptly
as possible, but in no event later than ten (10) days
following the Option Exercise Date, select its
respective Appraiser. The Third MAI Appraiser shall be
selected no later than five (5) days after the
selection of the other Appraisers. The costs of the
Appraisers' appraisals shall be shared equally by the
parties. As promptly as possible but in no event later
than fifteen (15) days after selection of the Third
Appraiser, each Appraiser shall deliver his or her
written report of the Appraisers' determination of the
fair market value of the Leased Property, which
determination shall be based, for each Leased Property,
upon the highest and best use of such Leased Property,
taking into consideration the location of such Leased
Property and other properties comparable thereto. The
"Appraised Value" of the Real Property shall be equal
to the arithmetic mean of the two (2) fair market value
determinations of the Appraisers that are closest in
value. In the event that the values of (i) the
difference between the highest appraisal value and the
next lower appraisal value, and (ii) the difference
between the lowest appraisal value and the next higher
appraisal value, are equal, then the "Appraised Value"
shall be equal
53
to the arithmetic mean of the fair market value
determinations of all Appraisers.
(c) Upon determination of the Property Consideration,
Landlord and Tenant agree to cooperate to close the
sale and purchase of the Leased Property entirely for
cash on an "as is, where as basis" and with no
warranties by Landlord other than in a special warranty
deed, within forty-five (45) days after the date of
determination of the Property Consideration (the
"Option Closing Period"). If the sale and purchase of
the Leased Property does not close within the Option
Closing Period due to Tenant's default, Landlord shall
have no further obligations to Tenant pursuant to this
Section 16.02 (a).
ARTICLE XVII
MISCELLANEOUS
17.01 NOTICES. Landlord and Tenant hereby agree that all
notices, demands, requests, and consents (hereinafter "Notices") required to
be given pursuant to the terms of this Lease shall be in writing and shall be
addressed as follows:
If to Tenant:
Plains Chevrolet, Inc.
c/o Cross-Continent Auto Retailers, Inc.
0000 X. Xxxxxx
X.X. Xxx 000
Xxxxxxxx, Xxxxx 00000
Attention: R. Xxxxx Xxxxx, Esq.
With a copy to:
Sprouse, Mozola, Xxxxx & Xxxxxx, P.C.
000 Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
If to Landlord:
Capital Automotive L.P.
0000 Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
54
Attention: Xxxxxx X. Xxxxxx
With a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxx, Esq. and
Xxxx X. Xxxxxxx, Esq.
and shall be served by: (a) personal delivery; (b) certified mail, return
receipt requested, postage prepaid; or (c) nationally recognized overnight
courier. All notices shall be deemed to be given upon the earlier of actual
receipt or three (3) days after mailing, or one (1) business day after deposit
with the overnight courier. Any Notices meeting the requirements of this
Section shall be effective, regardless of whether or not actually received.
Landlord or Tenant may change its notice address at any time by giving the other
party Notice of such change. Any such Notice of change of address shall be
effective five (5) days after delivery.
17.02 ADVERTISEMENT OF A LEASED PROPERTY. In the event
the parties hereto have not executed a renewal lease, or agreed to the
Extension Term, as to the Leased Property within twelve (12) months prior to
the expiration of the Term or an Extension Term, as the case may be, then
Landlord or its agent shall have the right to enter such Leased Property at
all reasonable times for the purpose of exhibiting such Leased Property to
others and to place upon such Leased Property for and during the period
commencing two-hundred seventy (270) days prior to the expiration of the Term
or an Extension Term, as the case may be, "for sale" or Afor rent" notices or
signs.
17.03 LANDLORD'S ACCESS. Landlord, or its designated
agents or contractors, shall have the right to enter upon each Leased
Property, upon reasonable prior notice to Tenant, for purposes of inspecting
the same and assuring Tenant's compliance with this Lease provided, any such
entry by Landlord shall be subject to all rules, guidelines and procedures
prescribed by Tenant in connection therewith. Landlord shall not be allowed
entry to a Leased Property unless accompanied by such of Tenant's personnel
as Tenant shall require and which Tenant shall promptly provide.
17.04 ENTIRE AGREEMENT. This Lease contains the entire
agreement between Landlord and Tenant with respect to the subject matter
hereof. No representations, warranties, and agreements have been made by
Landlord or Tenant except as set forth in this Lease.
17.05 SEVERABILITY. If any term or provision of this
Lease is held by Landlord to be invalid or unenforceable as to a Leased
Property, such holding shall not affect the remainder of this Lease as to
such Leased Property, or the validity or enforceability of this Lease as to
any other Leased Property, and the same shall remain in full force and
effect, unless such holding substantially deprives Tenant of the use of such
Leased Property or Landlord of the Rents therefor, in which case
55
this Lease shall forthwith terminate as to such Leased Property as if by
expiration of the Term or an Extension Term, as the case may be, but shall
remain in full force and effect with respect to each other Leased Property.
17.06 CAPTIONS AND HEADINGS. The captions and headings
are inserted only as a matter of convenience and for reference and in no way
define, limit or describe the scope of this Lease or the intent of any
provision hereof.
17.07 GOVERNING LAW. This Lease shall be construed under
the laws of the State of Texas (without application of choice of law
provisions).
17.08 MEMORANDUM OF LEASE OR CERTAIN RIGHTS UNDER THE
LEASE. Landlord and Tenant agree that a record of this Lease or of certain
rights under this Lease may be recorded by either party in a memorandum of
lease approved by Landlord and Tenant with respect to each Leased Property.
The party recording such memorandum must bear all costs of such recording.
17.09 WAIVER. No waiver by Landlord of any condition or
covenant herein contained, or of any breach of any such condition or
covenant, shall be held or taken to be a waiver of any subsequent breach of
such covenant or condition, or to permit or excuse its continuance or any
future breach thereof or of any condition or covenant, nor shall the
acceptance of Rent by Landlord at any time when Tenant is in default in the
performance or observance of any condition or covenant herein be construed as
a waiver of such default, or of Landlord's right to terminate this Lease or
exercise any other remedy granted herein on account of such default.
17.10 ASSIGNMENT; BINDING EFFECT. Except as otherwise set
forth herein, this Lease shall not be assignable by Tenant, without the prior
written consent of Landlord. This Lease will be binding upon and inure to
the benefit of the heirs, successors, personal representatives, and permitted
assigns of Landlord and Tenant.
17.11 CONSENTS AND APPROVALS. In each instance in this
Lease where the Landlord is required or permitted to give a consent or
approval, or to make a determination, the Landlord's decision and any
conditions thereon must be reasonable under the circumstances. Except as
provided in Sections 8.07(d), 13.01 and 13.07, there shall be a presumption
that each such decision and any conditions thereon by Landlord was in fact
reasonable, and Tenant shall have the burden of proof in any attempt to rebut
that presumption. With respect to Sections 8.07(d), 13.01 and 13.07, there
shall be a presumption that each such decision and any conditions thereon by
Landlord was in fact unreasonable, and Landlord shall have the burden of
proof in any attempt to rebut that presumption.
17.12 SINGLE PROPERTY. Throughout the form of this Lease
there are references to "Leased Properties". If, in fact, there is only one
Leased Property being leased hereunder, all such references shall, without
further action, be deemed amended to refer solely to such Leased Property and
all provisions relating to Leased Properties, including remedies applicable to
only one Leased
56
Property, shall likewise be amended to the extent necessary, but
only to the extent necessary, to give effect to the fact that there is only one
Leased Property.
17.13 MODIFICATION. This Lease may only be modified by a
writing signed by both Landlord and Tenant.
17.14 INCORPORATION BY REFERENCE. All schedules and exhibits
referred to in this Lease are incorporated herein by reference.
17.15 NO MERGER. As to each Leased Property, the surrender of
this Lease by Tenant or the cancellation of this Lease by agreement of Tenant
and Landlord or the termination of this Lease on account of Tenant's default
will not work a merger, and will, at Landlord's option, terminate any
subleases or operate as an assignment to Landlord of any subleases.
Landlord's option under this paragraph will be exercised by notice to Tenant
and all known subtenants of such Leased Property.
17.16 FORCE MAJEURE. Landlord, its agents and employees, will
not be liable for any loss, injury, death, or damage (including consequential
damages) to persons, property, or Tenant's Business occasioned by theft, act
of God, public enemy, injunction, riot, strike, insurrection, war, court
order, requisition, order of governmental body or authority, fire, explosion,
falling objects, steam, water, rain or snow, leak or flow of water (including
water from the elevator system), rain or snow from any Leased Property or
into any Leased Property or from the roof, street, subsurface or from any
other place, or by dampness or from the breakage, leakage, obstruction, or
other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, or lighting fixtures of any Leased Property, or from
construction, repair, or alteration of any Leased Property or from any acts
or omissions of any other occupant or visitor of any Leased Property, or from
the release, emission, discharge, presence or disposal of any hazardous
substance or material on or from any Leased Property, or from any other cause
beyond Landlord's control.
17.17 LACHES. No delay or omission by either party hereto to
exercise any right or power accruing upon any noncompliance or default by the
other party with respect to any of the terms hereof shall impair any such
right or power or be construed to be a waiver thereof.
17.18 WAIVER OF JURY TRIAL. To the extent that there is any
claim by one party against the other that is not to be settled by arbitration
as provided in Article XIV hereof, Landlord and Tenant waive trial by jury in
any action, proceeding or counterclaim brought by either of them against the
other on all matters arising out of this Lease or the use and occupancy of
any Leased Property (except claims for personal injury or property damage).
If Landlord commences any summary proceeding for nonpayment of Rent, Tenant
will not interpose, and waives the right to interpose, any counterclaim in
any such proceeding.
17.19 PERMITTED CONTESTS. Tenant, on its own or on Landlord's
behalf (or in Landlord's name), but at Tenant's expense, may contest, by
appropriate legal proceedings conducted
57
in good faith and with due diligence, the amount or validity or application,
in whole or in part, of any Imposition or any legal requirement or insurance
requirement or any lien, attachment, levy, encumbrance, charge or claim
provided that: (a) in the case of an unpaid Imposition, lien, attachment,
levy, encumbrance, charge or claim, the commencement and continuation of such
proceedings shall suspend the collection thereof from Landlord and from the
subject Leased Property; (b) neither the subject Leased Property nor any Rent
therefrom nor any part thereof or interest therein would be in any immediate
danger of being sold, forfeited, attached or lost; (c) in the case of a legal
requirement, Landlord would not be in any immediate danger of civil or
criminal liability for failure to comply therewith pending the outcome of
such proceedings; (d) in the event that any such contest shall involve a sum
of money or potential loss in excess of Twenty Five Thousand Dollars
($25,000), Tenant shall deliver to Landlord and its counsel an opinion of
Tenant's counsel to the effect set forth in clauses (a), (b) and (c), to the
extent applicable; (e) in the case of a legal requirement and/or an
Imposition, lien, encumbrance, or charge, Tenant shall give such reasonable
security as may be demanded by Landlord to insure ultimate payment of the
same and to prevent any sale or forfeiture of a subject Leased Property or
the Rent in respect thereof by reason of such nonpayment or noncompliance;
provided, however, the provisions of this Section shall not be construed to
permit Tenant to contest the payment of Rent (except as to contests
concerning the method of computation or the basis of levy of any Imposition
or the basis for the assertion of any other claim) or any other sums payable
by Tenant to Landlord hereunder; (f) in the case of an insurance requirement,
the coverage required by Article IV shall be maintained; and (g) if such
contest be finally resolved against Landlord or Tenant, Tenant shall, as
Additional Rent due hereunder, promptly pay the amount required to be paid,
together with all interest and penalties accrued thereon, or comply with the
applicable legal requirement or insurance requirement. Landlord, at Tenant's
expense, shall execute and deliver to Tenant such authorizations and other
documents as may be reasonably required in any such contest, and, if
reasonably requested by Tenant or if Landlord so desires, Landlord shall join
as a party therein. Tenant hereby agrees to indemnify and hold harmless
Landlord, its officers, trustees, employees, shareholders, affiliates and
agents from and against any and all demands, claims, causes of action, fines,
penalties, damages (including punitive and consequential damages), losses,
liabilities (including strict liability), judgments, costs and expenses
(including, without limitation, attorneys' fees, court costs, and the costs
set forth in Section 9.06) that may be incurred in connection with or arise
from any such contest.
17.20 CONSTRUCTION OF LEASE. This Lease has been reviewed by
Landlord and Tenant and their respective professional advisors. Landlord and
Tenant believe that this Lease is the product of all their efforts, that they
express their agreement, and agree that they shall not be interpreted in
favor of either Landlord or Tenant or against either Landlord or Tenant
merely because of any party's efforts in preparing such documents.
17.21 COUNTERPARTS. This Lease may be executed in duplicate
counterparts, each of which shall be deemed an original hereof or thereof.
58
17.22 RELATIONSHIP OF LANDLORD AND TENANT. The relationship of
Landlord and Tenant is the relationship of lessor and lessee. Landlord and
Tenant are not partners, joint venturers, or associates.
{remainder of this page left intentionally blank}
59
IN WITNESS WHEREOF, the parties hereto have executed this
Lease or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
CAPITAL AUTOMOTIVE L.P., a Delaware limited partnership
By: Capital Automotive REIT,
Its General Partner
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
PLAINS CHEVROLET, INC., a Texas corporation
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
PLAINS CHEVROLET, INC. LEASE AGREEMENT SCHEDULES AND EXHIBITS
SCHEDULES
A Leased Properties
B Permitted Liens
12.02 Material Agreements
12.03 Changes in Condition
EXHIBITS
2.02 Payment Account Information
2.04 Base Annual Rent Adjustment
5.07 Environmental Reports
15.02 Form of Subordination and Non-Disturbance Agreement
SCHEDULE A
LEASED PROPERTIES
Lessee: Plains Chevrolet, Inc.
Leased Property: 0000 X-00 Xxxx
Xxxxxxxx, Xxxxx 00000
0000 X-00 Xxxx
Xxxxxxxx, Xxxxx 00000
0000 X-00 Xxxx
Xxxxxxxx, Xxxxx 00000
Initial Base Rent: $517,000
SCHEDULE B
PERMITTED LIENS
SCHEDULE 12.02
MATERIAL AGREEMENTS
SCHEDULE 12.03
CHANGES IN CONDITION
EXHIBIT 2.02
PAYMENT ACCOUNT INFORMATION
Wiring instructions for the Landlord's operating account are as follows:
FIRST UNION NATIONAL BANK OF VIRGINIA
CHARLOTTE, NC
ABA# 000000000
For Credit to: CAPITAL AUTOMOTIVE REIT, Operating Account
Account # 2050000478240
EXHIBIT 2.04
BASE ANNUAL RENT ADJUSTMENT
The Base Annual Rent shall be increased, effective as of the
commencement of the fourth Lease Year and as of each subsequent Lease Year by
an amount equal to the Base Annual Rent multiplied by 100 percent (100%) of
the change in the Index during the immediately preceding one (1) year period;
provided, however, that, in the event that the above-calculated adjustment is
greater than two percent and one-half (22%), such adjustment shall be equal
to two and one-half percent (22%).
EXHIBIT 5.07
ENVIRONMENTAL REPORTS
EXHIBIT 15.02
SUBORDINATION AND NON-DISTURBANCE AGREEMENT
THIS AGREEMENT is made as of this ___ day of __________, 1998, among
_____________, a ___________ organized under the laws of the State of
_____________ ("Lender"), __________________ ("Tenant"), and CAPITAL
AUTOMOTIVE L.P., a Delaware limited partnership ("Landlord").
WITNESSETH:
WHEREAS, Landlord and Tenant have entered into a certain Lease, dated
__________________, which lease and all amendments, modifications,
assignments, subleases and other agreements related thereto are attached
hereto as EXHIBIT A and incorporated herein by this reference (collectively,
the "Lease"), which Lease relates to the premises described therein (the
"Premises"), and
WHEREAS, Lender has made or has committed to make a first mortgage loan
to Landlord in the principal amount not to exceed $_________ (the "Loan"),
the Loan being secured by a mortgage, deed of trust or security deed
(collectively, the "Mortgage") and an assignment(s) of leases and rents from
Landlord to Lender covering the Premises; and
WHEREAS, Tenant has agreed that the Lease shall be subject and
subordinate to the Mortgage held by Lender, provided Tenant is assured of
continued occupancy of the Premises under the terms of the Lease;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the sum of Ten Dollars ($10.00) and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
and notwithstanding anything in the Lease to the contrary, it is hereby
agreed as follows:
1. SUBORDINATION OF LEASE. Lender, Tenant and Landlord do hereby
covenant and agree that the Lease with all rights, options, liens and charges
created thereby, is and shall continue to be subject and subordinate in all
respects to the Mortgage and to any renewals, modifications, consolidations,
replacements and extensions thereof and to all advancements made thereunder.
2. NONDISTURBANCE OF TENANT. Lender does hereby agree with Tenant
that, in the event Lender becomes the owner of the Premises by foreclosure,
conveyance in lieu of foreclosure or otherwise, so long as Tenant complies
with and performs its obligations under the Lease, (a) Lender will take no
action which will interfere with or disturb Tenant's possession or use of the
Premises or other rights under the Lease, and (b) the Premises shall be
subject to the Lease and Lender shall recognize Tenant as the tenant of the
Premises for the remainder of the terms of the
Lease in accordance with the provisions thereof, provided, however, that
Lender shall not be subject to any offsets or defenses which Tenant might
have against any prior landlord except those which arose under the provisions
of the Lease out of such landlord's default and accrued after Tenant had
notified Lender and given Lender the opportunity to cure same as hereinbelow
provided, nor shall Lender be liable for any act or omission of any prior
landlord, nor shall Lender be bound by any rent or additional rent which
Tenant might have paid for more than the current month to any prior landlord
nor shall it be bound by any amendment or modification of the Lease made
without its consent.
3. ATTORNMENT BY TENANT. Tenant does hereby agree with Lender that,
in the event Lender becomes the owner of the Premises by foreclosure,
conveyance in lieu of foreclosure or otherwise, then Tenant shall attorn to
and recognize Lender as the landlord under the Lease for the remainder of the
term thereof, and Tenant shall perform and observe its obligations
thereunder, subject only to the terms and conditions of the Lease. In such
event, Lender shall not be liable for any act or omission of any prior
landlord, liable for return of the security deposit unless same was actually
delivered to Lender, bound by any amendment to or assignment of the Lease
made without its consent, bound by any rent paid more than thirty (30) days
in advance, or be subject to any set-off or defense Tenant might have had
against any prior landlord. Tenant further covenants and agrees to execute
and deliver upon request of Lender or its assigns, an appropriate Agreement
of Attornment to Lender and any subsequent titleholder of the Premises.
4. ACKNOWLEDGMENT OF ACQUISITION RIGHTS. Lender acknowledges that
Tenant has certain purchase rights under the lease. So long as Tenant
complies with the provisions of the Lease, Lender acknowledges that Tenant
may exercise such rights and Lender will honor such rights so long as Tenant
pays the acquisition price to Lender or otherwise obtains a release from
Lender.
5. CURATIVE RIGHTS, MODIFICATION OF LEASE, AND ADVANCE PAYMENT OF
RENT. So long as the Mortgage remains outstanding and unsatisfied:
(a) Tenant will mail or deliver to Lender, at the address and in the
manner hereinbelow provided, a copy of all notices permitted or required to
be given to the Landlord by Tenant under and pursuant to the terms and
provisions of the Lease. At any time before the rights of the Landlord shall
have been forfeited or adversely affected because of any default of the
Landlord, or within the time permitted the Landlord for curing any default
under the Lease as therein provided, Lender may, but shall have no obligation
to, pay any taxes and assessments, make any repairs and improvements, make
any deposits or do any other act or thing required of the Landlord by the
terms of the Lease; and all payments so made and all things so done and
performed by Lender shall be as effective to prevent the rights of the
Landlord from being forfeited or adversely affected because of any default
under the Lease as the same would have been if done and performed by the
Landlord.
(b) Tenant will not consent to the modification of the Lease, nor to
the termination thereof, without the prior written consent of Lender, such
consent not to be unreasonably withheld or delayed, nor will Tenant pay any
rent under the Lease more than thirty (30) days in advance.
-2-
(c) Notwithstanding anything herein to the contrary, at any time that
the Landlord and the Tenant shall agree to a modification or the termination
of the Lease, Tenant shall provide written notice and a copy of the agreement
to Lender within five (5) business days of the execution of the agreement and
shall deliver a copy of the notice to Landlord. Tenant shall make such
delivery by first class mail, return receipt requested. Lender shall have
thirty (30) business days from the date of receipt of the notice to deliver
to Tenant and Landlord notice of its approval or disapproval of the proposed
modification or termination of the Lease. If Tenant and Landlord do not
receive such notice from Lender within such time, Lender shall be deemed to
have consented to the noticed modification or termination of the Lease.
6. CONSENT TO ASSIGNMENT. Tenant acknowledges that Landlord will
execute and deliver to Lender an assignment of the Lease as security for the
Loan, and Tenant hereby expressly consents to such assignment.
7. LIMITATION OF LIABILITY. Lender shall have no liability whatsoever
hereunder prior to becoming the owner of the Premises; and Tenant agrees that
if Lender becomes the owner of the Premises, Tenant shall look solely to the
estate or interest of Lender in the Premises for satisfaction of any
obligation which may be or become owing by Lender to Tenant hereunder or
under the Lease.
8. LANDLORD AND TENANT CERTIFICATIONS. Landlord and Tenant hereby
certify to Lender that the Lease has been duly executed by Landlord and
Tenant and is in full force and effect, that the Lease and any modifications
and amendments specified herein are a complete statement of the agreement
between Landlord and Tenant with respect to the leasing of the Premises, and
the Lease has not been modified or amended except as specified herein; that
to the knowledge of Landlord and Tenant, no party to the Lease is in default
thereunder; that no rent under the Lease has been paid more than thirty (30)
days in advance of its due date; and that Tenant, as of this date, has no
charge, lien or claim of offset under the Lease, or otherwise, against the
rents or other charges due or to become due thereunder.
9. TENANT ESTOPPEL CERTIFICATIONS. With the knowledge that Lender, as
beneficiary of the mortgage encumbering the premises, will place substantial
reliance thereon in connection with the closing and funding of the Loan,
Tenant hereby makes the following certifications:
(a) The term of the Lease commenced on ________, 19__, and will
terminate on ______________.
(b) The Lease, as described above, has not been modified, amended,
assigned or subleased except as set forth in EXHIBIT A attached hereto, and
is in good standing and in full force and effect.
-3-
(c) The Lease provides for rental payments over the term of the Lease,
all as specifically provided in the Lease. No rent under the Lease has been
paid more than thirty (30) days in advance of the due date of same. For the
year ____, monthly payments, which are due on the first (1st) day of each
month, are as follows: Basic Rent - $________
Payment of the above amount was timely made for the months of ______,
___and _____, ____, and the next payment of the above amount will be due on
________, ____. In addition to the above amount, certain additional sums are
due to Landlord from Tenant under the Lease, all as specifically set forth in
the Lease.
(d) Tenant has paid a security deposit under the Lease.
(e) To Tenant's knowledge there are no defaults by Landlord under the
Lease and there are no existing circumstances which, with the passage of
time, or notice, or both, would give rise to a default under the Lease.
(f) Tenant has accepted and is occupying the Premises, and Landlord has
no unperformed obligation under the Lease to construct any improvements for
the Tenant related to the Premises.
(g) As of the date of this Agreement, Tenant has no charge, lien, claim
of set-off or defense against rents or other charges due or to become due
under the Lease or otherwise under any of the terms, conditions, or covenants
contained therein.
(h) Tenant has received no notice from any insurance company of any
defects or inadequacies in the Premises or in any part thereof which would
adversely affect the insurability of the Premises.
(i) Except as provided in the Lease, Tenant does not have any right or
option to purchase the Premises.
(j) Except as provided in the Lease, Tenant does not have any rights or
options to renew the Lease or to lease additional space in any building owned
by the Landlord.
10. TENANT COVENANTS.
(a) From and after the date hereof, Tenant will not pay any rent under
the Lease more than thirty (30) days in advance of its due date.
(b) From and after the date hereof, so long as there shall be any
assignment of Landlord's interest in the Lease to Lender, or any successor
thereto, Tenant will not: consent to the modification
-4-
of the Lease nor to the termination thereof without the prior written consent
of the Lender or any successor holder of the Loan or the Mortgage which
consent shall not be unreasonably withheld or delayed (either of them being
called "Mortgagee"), nor seek to terminate the Lease by reason of any act or
omission of Landlord until Tenant shall have given written notice of such act
or omission to such Mortgagee's last address furnished Tenant) and until a
reasonable period of time shall have elapsed following the giving of such
notice, during which period the Mortgagee shall have the right, but not the
obligation, to remedy such act or omission.
(c) Upon written notice of the default by Landlord under any of the
loan documents held by Mortgagee and assignment of the Landlord's interest
under the Lease by Landlord to Mortgagee, Tenant, if Mortgagee so requests,
will recognize such Mortgagee as the Landlord under the Lease and will
thereafter pay rent and other sums to Mortgagee (or to the party designated
by the Mortgagee in writing) in accordance with the terms of the Lease, and,
in such event, such Mortgagee will not be liable for any act or omission of
any prior lessor, liable for return of the security deposit unless same was
actually delivered to Mortgagee, bound by any amendment to or assignment of
the Lease made without its consent, bound by any rent paid more than thirty
(30) days in advance, or be subject to any set-off or defense Tenant might
have had against any prior lessor.
-5-
11. NOTICES. Unless and except as otherwise specifically provided
herein, any and all notices, elections, approvals, consents, demands,
requests and responses thereto ("Communications") permitted or required to be
given under this Agreement shall be in writing, signed by or on behalf of the
party giving the same, and shall be deemed to have been properly given and
shall be effective upon the earlier of receipt thereof or three (3) days
after deposit thereof in the United States mail, postage prepaid, certified
with return receipt requested, to the other party at the address of such
other party set forth hereinbelow or at such other address within the
continental United States as such other party may designate by notice
specifically designated as a notice of change of address and given in
accordance herewith; provided, however, that the time period in which a
response to any Communication must be given shall commence on the date of
receipt thereof, and provided further that no notice of change of address
shall be effective with respect to Communications sent prior to the time of
receipt of such change. Receipt of Communications hereunder shall occur upon
actual delivery (whether by mail, facsimile transmission, messenger, courier
service, or otherwise) to an individual party or to an officer, member, or
general or limited partner of a party or to any agent or employee of such
party at the address of such party set forth hereinbelow, subject to change
as provided hereinabove. An attempted delivery in accordance with the
foregoing, acceptance of which is refused or rejected, shall be deemed to be
and shall constitute receipt; and an attempted delivery in accordance with
the foregoing by mail, messenger, or courier service (whichever is chosen by
the sender) which is not completed because of changed address of which no
notice was received by the sender in accordance with this provision prior to
the sending of the Communication shall also be deemed to be and constitute
receipt. Any Communication, if given to Lender, must be addressed as
follows, subject to change as provided hereinabove:
-------------------------------
-------------------------------
-------------------------------
and, if given to Tenant, must be addressed as follows, subject to change as
provided hereinabove:
-------------------------------
-------------------------------
-------------------------------
and, if given to Landlord, must be addressed as follows, subject to change as
provided hereinabove:
Capital Automotive, L.P.
0000 Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
12. MISCELLANEOUS. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors, successors-in-title and
-6-
assigns. When used herein, the term "Landlord" or "landlord" refers to
Landlord and to any successor to the interest of Landlord under the Lease.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-7-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first above written.
LENDER:
Signed, sealed and delivered
in the presence of: By:
Title:
-------------------------------- --------------------------------
Witness (CORPORATE SEAL)
TENANT:
Signed, sealed and delivered
in the presence of: By:
Title:
-------------------------------- --------------------------------
Witness (CORPORATE SEAL)
LANDLORD:
Signed, sealed and delivered
in the presence of: By:
Title:
-------------------------------- --------------------------------
Witness (PARTNERSHIP SEAL)
-8-
EXHIBIT A
Lease Dated __________ from ________________ to _______________ with Exhibit
A attached, all in the form attached hereto as ATTACHMENT TO EXHIBIT A.
-9-
County of :
----------------------------
SS:
State of :
----------------------------
This is to certify that on this ____ day of ________, 1997, personally
appeared before me, a notary public of the County (City) aforesaid, known to
me (or satisfactorily identified to me) to be the individual signing on
behalf of Lender in the capacity stated by his signature, and that he
acknowledged the within document to be the act and deed of the Lender.
----------------------------
Notary Public
My commission expires:
-10-
County of :
----------------------------
SS:
State of :
----------------------------
This is to certify that on this ____ day of _________, 1997, personally
appeared before me, a notary public of the County (City) aforesaid, known to
me (or satisfactorily identified to me) to be the individual signing on
behalf of Tenant in the capacity stated by his signature, and that he
acknowledged the within document to be the act and deed of the Tenant.
----------------------------
Notary Public
My commission expires:
-11-
County of :
----------------------------
SS:
State of :
----------------------------
This is to certify that on this ____ day of _______, 1997, personally
appeared before me, a notary public of the County (City) aforesaid, known to
me (or satisfactorily identified to me) to be the individual signing on
behalf of Landlord in the capacity stated by his signature, and that he
acknowledged the within document to be the act and deed of the Landlord.
----------------------------
Notary Public
My commission expires:
-12-
EXHIBIT 15.04
Tenant Name:
-----------------------------
TENANT ESTOPPEL CERTIFICATE
The undersigned ("Tenant") hereby warrants, represents and certifies to
and agrees with _________________, whose mailing address is
____________________ ("Lender"), the following statements set forth below in
this Tenant Estoppel Certificate (the "Certificate") with the understanding
that Lender is relying on such warranties, representations, certifications
and agreements in this Certificate as an inducement to the Lender in making a
permanent loan (the "Loan") to ___________________ ("Landlord"), secured by,
among other things, that certain deed of trust/mortgage, assignment of rents
and security agreement executed (or to be executed) by Landlord for the
benefit of Lender (the "Instrument") encumbering the land and buildings
located on the property as more particularly described on Exhibit A attached
hereto (the "Mortgaged Property"). Based upon the foregoing, Tenant hereby
warrants, represents and certifies as follows:
1. The Tenant is the tenant under that certain lease (the "Lease")
dated ____________________, 19__ as amended on _____________ between
Landlord, as landlord, and Tenant, as tenant, covering the Mortgaged Property
and the following information concerning the Lease, the Tenant and the
Mortgaged Property is true and correct.
(a) A true, correct and complete copy of the Lease together with
all amendments, modifications, side letters, guaranties, letters of credit
and other documents evidencing, governing or securing the Tenant's
obligations under the Lease are attached hereto as Exhibit B. The Lease
constitutes the entire agreement between the Landlord and the Tenant
concerning the Mortgaged Property and there are no other agreements, written
or oral, between the Landlord and the Tenant relating thereto except as
attached in Exhibit B. The guarantor of the Lease is Cross-Continent Auto
Retailers, Inc., a Delaware corporation.
(b) The Lease has commenced pursuant to its terms and is in full
force and effect. Except as otherwise set forth in the Lease, the Tenant has
no right to vacate the Mortgaged Property or cease to operate its business
therefrom, except as provided in the Lease for reasons of casualty to or
condemnation or the Leased Property.
(c) The Lease commenced on ___________ and expires on __________.
The Tenant has ___________ remaining options to renew the Lease for a
successive period of _________ years.
(d) The Lease is an absolute net lease, and the Tenant is
presently obligated under the lease to pay (i) monthly Rent to the Landlord
[$___________](subject to annual upward adjustment), and (ii) all taxes,
assessments, water, sewer and other charges, levies and fees, utilities
government charges and other sums or amounts of any kind that come due or are
payable during the term of the Lease.
(e) The Tenant has paid the monthly rent described in subparagraph
1(d)(i) above through and including the month of ______________, 19__. The
Tenant has paid the charges described in subparagraphs 1(d)(ii) through the
most recent billing period for such charges.
(f) The Tenant is in possession of the Mortaged Property, is
presently open and conducting business with the public at the Mortgaged
Property under the trade name of _________________.
(g) As of the date hereof, except as otherwise expressly set forth
on the attached schedule (if necessary), the Tenant is not entitled to any
credits, reductions, offsets, defenses, free rent, rent concessions or
abatements of rent under the Lease or otherwise against the payment of rent
or other charges under the Lease.
(h) No rent has been paid more than (1) month in advance.
(i) All of the obligations of the Landlord under the Lease have
been duly performed and completed including, without limitations, any
obligations of the Landlord to make or to pay the Tenant for any
improvements, alterations or work done on the Mortgaged Property.
(j) There are no existing or claimed conditions which are or with
the passage of time would constitute a default on the part of the Landlord or
the Tenant under the terms of the Lease. The Tenant has not assigned,
transferred, mortgaged, or hypothecated the Lease or any interest therein or
subleased all or any portion of the Mortgaged Property.
(k) The Landlord is holding a security deposit in the amount of
$__________.
(l) Neither Tenant nor any guarantor of the Lease is presently the
subject of any proceeding pursuant to the United States Bankruptcy Code of
1978, as amended.
2. The Certificate shall apply to, bind and inure to the benefit of
the Lender and the Tenant and their respective successors and assigns. As
used herein, the term "Tenant" shall mean and include the present tenant
under the Lease, any permitted subtenant under the Lease, any permitted
assigned of Tenant under the Lease and any successor of any of them. The
term "Lender" as used herein shall include the current holder of the
Instrument [__________], the successors and assigns of Lender of [__________],
and any person, party or entity which shall become the owner of (a) the
Mortgaged Property by reason of a foreclosure of the Instrument or the
acceptance of a deed or assignment in lieu of foreclosure or otherwise and/or
(b) the Loan and Instrument; provided,
-2-
however, any party listed herein as included in the definition of "Lender"
shall only be liable for any acts, omissions, liabilities or obligations of
that particular party and not for any such matters of any other party
included in the definition of "Lender". The term ALandlord" as used herein
shall mean and include the present landlord under the Lease and such
landlord's predecessors and successors in interest under the Lease.
TENANT:
-----------------------------------
a
---------------------------------
By:
---------------------------------
Title:
---------------------------------
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EXHIBIT A
Mortgaged Property
-4-
